Flexibility, Uncertainty and Optimisation of Investments: an Introduction

Our modern world is giving more and more attention to flexibility. This tendency appears in economic analysis through the increasing interest given to dynamic programming and option values. Without aiming at providing a full view of such large fields, the article tries to make clear and illustrate the most remarkable general result: the decision should be optimised, and generally postponed, in order to take advantage of the increasing information which will happen as time passes. In terms of economic analysis, and especially of dealing with the discount rate, the consequences are different according to the type of decision, whether it is related to a private good, priced through financial markets and goods markets, or a public good, designed in order to maximize some form of welfare.