Real options and game theoretical approaches to real estate development projects: multiple equilibria and the implications of different tie-breaking rules

This paper contributes to a fast growing literature which introduces game theory in the analysis of real option investments in a competitive setting. Specifically, in this paper we focus on the issue of multiple equilibria and on the implications that different equilibrium selections may have for the pricing of real options and for subsequent strategic decisions. We present some theoretical results of the necessary conditions to have multiple equilibria and we show under which conditions different tie-breaking rules result in different economic decisions. We then present a numerical exercise using the in formation set obtained on a real estate development in South London. We find that risk aversion reduces option value and this reduction decreases marginally as negative externalities decrease.

Precise calculations of the existence of multiple AMOC equilibria in coupled climate models Part I: equilibrium states

This study examines criteria for the existence of two stable states of the Atlantic Meridional Overturning Circulation (AMOC) using a combination of theory and simulations from a numerical coupled atmosphere–ocean climate model. By formulating a simple collection of state parameters and their relationships, the authors reconstruct the North Atlantic Deep Water (NADW) OFF state behavior under a varying external salt-flux forcing. This part (Part I) of the paper examines the steady-state solution, which gives insight into the mechanisms that sustain the NADW OFF state in this coupled model; Part II deals with the transient behavior predicted by the evolution equation. The nonlinear behavior of the Antarctic Intermediate Water (AAIW) reverse cell is critical to the OFF state. Higher Atlantic salinity leads both to a reduced AAIW reverse cell and to a greater vertical salinity gradient in the South Atlantic. The former tends to reduce Atlantic salt export to the Southern Ocean, while the latter tends to increases it. These competing effects produce a nonlinear response of Atlantic salinity and salt export to salt forcing, and the existence of maxima in these quantities. Thus the authors obtain a natural and accurate analytical saddle-node condition for the maximal surface salt flux for which a NADW OFF state exists. By contrast, the bistability indicator proposed by De Vries and Weber does not generally work in this model. It is applicable only when the effect of the AAIW reverse cell on the Atlantic salt budget is weak.

Non-existence of competitive equilibria with dynamically inconsistent preferences

This paper shows the robust non-existence of competitive equilibria even in a simple three period representative agent economy with dynamically inconsistent preferences. We distinguish between a sophisticated and naive representative agent. Even when underlying preferences are monotone and convex, at given prices, we show by example that the induced preference of the sophisticated representative agent over choices in first-period markets is both non-convex and satiated. Even allowing for negative prices, the market-clearing allocation is not contained in the convex hull of demand. Finally, with a naive representative agent, we show that perfect foresight is incompatible with market clearing and individual optimization at given prices.

Climate determinism revisited: multiple equilibria in a complex climate model

Multiple equilibria in a coupled ocean–atmosphere–sea ice general circulation model (GCM) of an aquaplanet with many degrees of freedom are studied. Three different stable states are found for exactly the same set of parameters and external forcings: a cold state in which a polar sea ice cap extends into the midlatitudes; a warm state, which is ice free; and a completely sea ice–covered “snowball” state. Although low-order energy balance models of the climate are known to exhibit intransitivity (i.e., more than one climate state for a given set of governing equations), the results reported here are the first to demonstrate that this is a property of a complex coupled climate model with a consistent set of equations representing the 3D dynamics of the ocean and atmosphere. The coupled model notably includes atmospheric synoptic systems, large-scale circulation of the ocean, a fully active hydrological cycle, sea ice, and a seasonal cycle. There are no flux adjustments, with the system being solely forced by incoming solar radiation at the top of the atmosphere. It is demonstrated that the multiple equilibria owe their existence to the presence of meridional structure in ocean heat transport: namely, a large heat transport out of the tropics and a relatively weak high-latitude transport. The associated large midlatitude convergence of ocean heat transport leads to a preferred latitude at which the sea ice edge can rest. The mechanism operates in two very different ocean circulation regimes, suggesting that the stabilization of the large ice cap could be a robust feature of the climate system. Finally, the role of ocean heat convergence in permitting multiple equilibria is further explored in simpler models: an atmospheric GCM coupled to a slab mixed layer ocean and an energy balance model

Spectral nonlocality, absolute equilibria and Kraichnan-Leith-Batchelor phenomenology in two-dimensional turbulent energy cascades

We study the degree to which Kraichnan–Leith–Batchelor (KLB) phenomenology describes two-dimensional energy cascades in α turbulence, governed by ∂θ/∂t+J(ψ,θ)=ν∇2θ+f, where θ=(−Δ)α/2ψ is generalized vorticity, and ψ^(k)=k−αθ^(k) in Fourier space. These models differ in spectral non-locality, and include surface quasigeostrophic flow (α=1), regular two-dimensional flow (α=2) and rotating shallow flow (α=3), which is the isotropic limit of a mantle convection model. We re-examine arguments for dual inverse energy and direct enstrophy cascades, including Fjørtoft analysis, which we extend to general α, and point out their limitations. Using an α-dependent eddy-damped quasinormal Markovian (EDQNM) closure, we seek self-similar inertial range solutions and study their characteristics. Our present focus is not on coherent structures, which the EDQNM filters out, but on any self-similar and approximately Gaussian turbulent component that may exist in the flow and be described by KLB phenomenology. For this, the EDQNM is an appropriate tool. Non-local triads contribute increasingly to the energy flux as α increases. More importantly, the energy cascade is downscale in the self-similar inertial range for 2.5<α<10. At α=2.5 and α=10, the KLB spectra correspond, respectively, to enstrophy and energy equipartition, and the triad energy transfers and flux vanish identically. Eddy turnover time and strain rate arguments suggest the inverse energy cascade should obey KLB phenomenology and be self-similar for α<4. However, downscale energy flux in the EDQNM self-similar inertial range for α>2.5 leads us to predict that any inverse cascade for α≥2.5 will not exhibit KLB phenomenology, and specifically the KLB energy spectrum. Numerical simulations confirm this: the inverse cascade energy spectrum for α≥2.5 is significantly steeper than the KLB prediction, while for α<2.5 we obtain the KLB spectrum.

Pulsating equilibria: stability through migration

This paper is to present a model of spatial equilibrium using a nonlinear generalization of Markov-chain type model, and to show the dynamic stability of a unique equilibrium. Even at an equilibrium, people continue to migrate among regions as well as among agent-types, and yet their overall distribution remain unchanged. The model is also adapted to suggest a theory of traffic distribution in a city.

Sudden stratospheric warmings as noise-induced transitions

Sudden stratospheric warmings (SSWs) are usually considered to be initiated by planetary wave activity. Here it is asked whether small-scale variability (e.g., related to gravity waves) can lead to SSWs given a certain amount of planetary wave activity that is by itself not sufficient to cause a SSW. A highly vertically truncated version of the Holton–Mass model of stratospheric wave–mean flow interaction, recently proposed by Ruzmaikin et al., is extended to include stochastic forcing. In the deterministic setting, this low-order model exhibits multiple stable equilibria corresponding to the undisturbed vortex and SSW state, respectively. Momentum forcing due to quasi-random gravity wave activity is introduced as an additive noise term in the zonal momentum equation. Two distinct approaches are pursued to study the stochastic system. First, the system, initialized at the undisturbed state, is numerically integrated many times to derive statistics of first passage times of the system undergoing a transition to the SSW state. Second, the Fokker–Planck equation corresponding to the stochastic system is solved numerically to derive the stationary probability density function of the system. Both approaches show that even small to moderate strengths of the stochastic gravity wave forcing can be sufficient to cause a SSW for cases for which the deterministic system would not have predicted a SSW.

Analysis and application of ichnofabrics

Bioturbation at all scales, which tends to replace the primary fabric of a sediment by the ichnofabric (the overall fabric of a sediment that has been bioturbated), is now recognised as playing a major role in facies interpretation. The manner in which the substrate may be colonized, and the physical, chemical and ecological controls (grainsize, sedimentation rate, oxygenation, nutrition, salinity, ethology, community structure and succession), together with the several ways in which the substrate is tiered by bioturbators, are the factors and processes that determine the nature of the ichnofabric. Eleven main styles of substrate tiering are described, ranging from single, pioneer colonization to complex tiering under equilibria, their modification under environmental deterioration and amelioration, and diagenetic enhancement or obscuration. Ichnofabrics may be assessed by four attributes: primary sedimentary factors, Bioturbation Index (BI), burrow size and frequency, and ichnological diversity. Construction of tier and ichnofabric constituent diagrams aid visualization and comparison. The breaks or changes in colonization and style of tiering at key stratal surfaces accentuate the surfaces, and many reflect a major environmental shift of the trace-forming biota. due to change in hydrodynamic regime (leading to non-deposition and/or erosion and/or lithification), change in salinity regime, or subaerial exposure. The succession of gradational or abrupt changes in ichnofabric through genetically related successions, together with changes in colonization and tiering across event beds, may also be interpreted in terms of changes in environmental parameters. It is not the ichnotaxa per se that are important in discriminating between ichnofabrics, but rather the environmental conditions that determine the overall style of colonization. Fabrics composed of different ichnotaxa (and different taphonomies) but similar tier structure and ichnoguild may form in similar environments of different age or different latitude. Appreciation of colonization and tiering styles places ancient ichnofabrics on a sound processrelated basis for environmental interpretation. (C) 2002 Elsevier Science B.V. All rights reserved.

Managing invasive alien species with professional and hobby farmers: insights from ecological-economic modelling

Biosecurity is a great challenge to policy-makers globally. Biosecurity policies aim to either prevent invasions before they occur or to eradicate and/or effectively manage the invasive species and diseases once an invasion has occurred. Such policies have traditionally been directed towards professional producers in natural resource based sectors, including agriculture. Given the wide scope of issues threatened by invasive species and diseases, it is important to account for several types of stakeholders that are involved. We investigate the problem of an invasive insect pest feeding on an agricultural crop with heterogeneous producers: profit-oriented professional farmers and utility-oriented hobby farmers. We start from an ecological-economic model conceptually similar to the one developed by Eiswerth and Johnson [Eiswerth, M.E. and Johnson, W.S., 2002. Managing nonindigenous invasive species: insights from dynamic analysis. Environmental and Resource Economics 23, 319-342.] and extend it in three ways. First, we make explicit the relationship between the invaded state carrying capacity and farmers' planting decisions. Second, we add another producer type into the framework and hence account for the existence of both professional and hobby fanners. Third, we provide a theoretical contribution by discussing two alternative types of equilibria. We also apply the model to an empirical case to extract a number of stylised facts and in particular to assess: a) under which circumstances the invasion is likely to be not controllable; and b) how extending control policies to hobby farmers could affect both types of producers. (C) 2008 Elsevier B.V. All rights reserved.

Structural and equilibrium studies on mixed ligand complexes of Co(II), Ni(II), Cu(II) and Zn(II) with N-(2-benzimidazolyl)methyliminodiacetic acid and typical N,N donor ligands

Mixed ligand complexes: [Co(L)(bipy)] (.) 3H(2)O (1), [Ni(L)(phen)] (.) H2O (2), [Cu(L)(phen)] (.) 3H(2)O (3) and [Zn(L)(bipy)] (.) 3H(2)O (4), where L2- = two -COOH deprotonated dianion of N-(2-benzimidazolyl)methyliminodiacetic acid (H(2)bzimida, hereafter, H,L), bipy = 2,2' bipyridine and phen = 1,10-phenanthroline have been isolated and characterized by elemental analysis, spectral and magnetic measurements and thermal studies. Single crystal X-ray diffraction studies show octahedral geometry for 1, 2 and 4 and square pyramidal geometry for 3. Equilibrium studies in aqueous solution (ionic strength I = 10(-1) mol dm(-3) (NaNO3), at 25 +/- 1 degrees C) using different molar proportions of M(II):H2L:B, where M = Co, Ni, Cu and Zn and B = phen, bipy and en (ethylene diamine), however, provides evidence of formation of mononuclear and binuclear binary and mixed ligand complexes: M(L), M(H-1L)(-), M(B)(2+), M(L)(B), M(H-1L)(B)(-), M-2(H-1L)(OH), (B)M(H-1L)M(B)(+), where H-1L3- represents two -COOH and the benzimidazole NI-H deprotonated quadridentate (O-, N, O-, N), or, quinquedentate (O-, N, O-, N, N-) function of the coordinated ligand H,L. Binuclear mixed ligand complex formation equilibria: M(L)(B) + M(B)(2+) = (B)M(H-1L)M(B)(+) + H+ is favoured with higher pi-acidity of the B ligands. For Co(II), Ni(II) and Cu(II), these equilibria are accompanied by blue shift of the electronic absorption maxima of M(II) ions, as a negatively charged bridging benzimidazolate moiety provides stronger ligand field than a neutral one. Solution stability of the mixed ligand complexes are in the expected order: Co(II) < Ni(II) < Cu(II) > Zn(II). The Delta logK(M) values are less negetive than their statistical values, indicating favoured formation of the mixed ligand complexes over the binary ones. (c) 2005 Elsevier B.V. All rights reserved.

Recent work on entropically-driven ring-opening polymerizations: some potential applications

The entropically-driven ring-opening polymerization of macrocyclic monomers (> ca. 14 ring atoms per repeat unit) and/or macrocyclic oligomers is a relatively new method of polymer synthesis that exploits the well-known phenomenon of ring-chain equilibria. It attracts interest because of its novel features. For example, these ring-opening polymerizations emit no volatiles and little or no heat. This review considers the principles of entropically-driven ring-opening polymerizations, gives selected examples and discusses potential applications. The latter include micromolding, high throughput syntheses and the synthesis of supramolecular polymers. Copyright (c) 2005 John Wiley T Sons, Ltd.