THE LATENT CHOICE. WHEN IT IS WORTH POSTPONING THE DECISION

We discuss choices among irreversible projects under uncertainty. This kind of problem was first posed studying natural resource utilization (Weisbrod, Arrow-Fisher), but our analysis may be applied to a wide class of phenomena. In an uncertain world, an economic agent, instead of committing himself to an irreversible decision, could prefer to postpone his choice waiting for better information. In this paper, we discuss the projects characteristics and the information qualities that make postponing the preferred choice. We use a Markov process with a three-period horizon, because it allows us to treat analitically the way in which information arrives over time.