01755cam a22002297 4500001000600000003000500006005001700011008004100028100002000069245012500089260006600214490005100280500001600331520080800347530006101155538007201216538003601288710004201324830008601366856003701452856003601489t0077NBER20191214035005.0191214s1989 mau||||fs|||| 000 0 eng d1 aDumas, Bernard.10aSuper Contact and Related Optimality Conditionsh[electronic resource]:bA Supplement to AvinashDixits /cBernard Dumas. aCambridge, Mass.bNational Bureau of Economic Researchc1989.1 aNBER technical working paper seriesvno. t0077 aApril 1989.3 aDixit (1988) observed that the mathematical construct of "regulated Brownian motion" developed by Harrison (1985) had proved useful in economic models of decision-making under uncertainty. In a recent note he provided a number of methods for calculating expected discounted payoff functions based on such processes. The purpose of this supplement is twofold: -determine to what extent the first-degree conditions reached by Dixit (his equations (12) and (13) or (12') and (13')) are simply a consequence of the definition of the expected discounted payoff, or to what extent they can be interpreted as first order conditions of some optimization problem, as has been suggested in Dumas(1988); -extend Dixit's treatment to the case where there are fixed costs of regulation as 1n Grossman-Laroque (1987). aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aTechnical Working Paper Series (National Bureau of Economic Research)vno. t0077.4 uhttp://www.nber.org/papers/t007741uhttp://dx.doi.org/10.3386/t0077