Contents	6
	List of Figures	10
	Acknowledgments	12
	Chapter 1 INTRODUCTION	13
	1. Rational Behaviour and Economics	13
	2. Introduction to Part I	17
	3. Introduction to Part II	22
	4. Introduction to Part III	25
	Chapter 2 MATHEMATICAL PRELIMINARIES	32
	1. Basic Concepts from Topology and Calculus	32
	2. Convex Analysis	35
	3. Triangulations	36
	4. Game Theory	37
	4.1 Non-Cooperative Theory	38
	4.2 Cooperative Theory	40
	5. Basic Concepts from Probability Theory	43
	6. Markov Chains	46
	6.1 Stochastic Stability	47
	6.2 Nearly-Complete Decomposability	50
	7. Stochastic Processes in Continuous Time	54
	7.1 Basic Stochastic Processes	59
	7.2 Optimal Stopping	61
	Chapter 3 THE EFFECT OF INFORMATION STREAMS ON CAPITAL BUDGETING DECISIONS	64
	1. Introduction	64
	2. The Model	67
	3. The Optimal Investment Decision	69
	4. Error Analysis	74
	5. Economic Interpretation	75
	6. Conclusions	81
	Appendix	82
	A. Proof of Proposition 3.1	82
	B. Proof of Proposition 3.2	83
	Chapter 4 SYMMETRIC EQUILIBRIA IN GAME THEORETIC REAL OPTION MODELS	86
	1. Introduction	86
	2. The General Model	89
	2.1 The Equilibrium Concept	90
	2.2 Preemption Games	97
	3. The Standard Model	99
	4. The Interaction of Competition and Uncertainty	101
	4.1 Equilibrium Selection	104
	4.2 The Impact of Uncertainty on Equilibria	107
	4.3 The E.ect of Competition on the Value of Waiting	108
	4.4 The E.ect of Uncertainty on Welfare Predictions	109
	5. Conclusion	112
	Appendix	113
	A. Proof of Theorem 4.1	113
	B. Some Integrals	117
	Chapter 5 THE EFFECTS OF INFORMATION ON STRATEGIC INVESTMENT	119
	1. Introduction	119
	2. The Model	123
	3. Exogenous Firm Roles	127
	4. Endogenous Firm Roles	128
	4.1 Dominant First Mover Advantage	129
	4.2 Dominant Second Mover Advantage	131
	5. Welfare Analysis	135
	6. Conclusions	140
	Appendix	141
	A. Proof of Proposition 5.1	141
	B. Proof of Lemma 5.1	143
	C. Proof of Proposition 5.2	144
	D. Proof of Proposition 5.3	145
	Chapter 6 SPILLOVERS AND STRATEGIC COOPERATIVE BEHAVIOUR	149
	1. Introduction	149
	2. The Model	151
	3. The Core	154
	4. Public-Private Connection Problems	156
	5. Government Situations	160
	5.1 The Power Index	161
	6. Mergers in Oligopolistic Markets	163
	6.1 The Compromise Value	165
	Appendix	169
	A. Proof of Theorem 6.1	169
	B. Constructing a Spillover Game from a Non- Cooperative Game	170
	Chapter 7 THE TIMING OF VERTICAL MERGERS UNDER UNCERTAINTY	171
	1. Introduction	171
	2. The Model	173
	3. The Effect of the Stand-Alone Option on the Timing of Mergers	176
	4. Implications	180
	Appendix	181
	A. Proof of Proposition 7.1	181
	Chapter 8 MULTI-LEVEL EVOLUTION IN COURNOT OLIGOPOLY	184
	1. Introduction	184
	2. The Model	187
	2.1 The Quantity Setting Level	188
	2.2 The Behavioural Level	189
	3. Analysis	192
	4. Conclusion	198
	Appendix	199
	A. Proof of Lemma 8.1	199
	B. Proof of Lemma 8.2	200
	Chapter 9 EVOLUTION OF CONJECTURES IN COURNOT OLIGOPOLY	201
	1. Introduction	201
	2. The Model	205
	3. A Simulation Study	208
	4. A Theoretical Analysis	211
	5. Discussion	218
	Appendix	219
	A. Proof of Lemma 9.1	219
	B. Proof of Lemma 9.2	220
	Chapter 10 BOUNDED RATIONALITY IN A FINANCE ECONOMY WITH INCOMPLETE MARKETS	221
	1. Introduction	221
	2. The Finance Economy	224
	3. Existence of Equilibrium	226
	4. A Boundedly Rational Path Towards Equilibrium	232
	5. The Algorithm	235
	References	241
	Author Index	251
	Subject Index	253
	About the Author	255
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