A large class of sequential decision-making problems undl uncertainty can bemodB3z as Markovand semiMarkovdrkov4B problems (SMDPs), when theirund4LzBII probability structure has a Markov chain. They may be solved by using classicaldassic programming (DP)methodV However, DPmethod su#er from thecurs of dimensORPOcG ( and breakdea rapidx in face of large state-spaces. In addition,

This paper is concerned with the optimal production planning in a dynamic stochastic manufacturing system consisting of a single or parallel machine that are failure prone and facing a constant demand. The objective is to choose the rate of production over time in order to minimize the long-run

This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two “quasi-natural experiments” in history, the division of Korea into two parts with very different economic institutions and the colonization of much of the world by European powers starting in the fifteenth century. We then develop the basic outline of a framework for thinking about why economic institutions differ across countries. Economic institutions determine the incentives of and the constraints on economic actors, and shape economic outcomes. As such, they are social decisions, chosen for their consequences. Because different groups and individuals typically benefit from different economic institutions, there is generally aconflict over these social choices, ultimately resolved in favor of groups with greater political power. The distribution of political power in society is in turn determined by political institutions and the distribution of resources. Political institutions allocate de

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Recent literature suggests that long-run averages of growth and inflation are only weakly correlated and such correlation is not robust to exclusion of extreme inflation observations; inclusion of time series panel data has improved matters but an aggregate parametric approach remains

We analyze the empirical power and specification of test statistics in event studies designed to detect long-run (one- to five-year) abnormal stock returns. We document that test statistics based on abnormal returns calculated using a reference portfolio, such as a market index, are misspecified

This paper is concerned with long-run average cost minimization of a stochastic inventory problem with Markovian demand, fixed ordering cost, and convex surplus cost. The states of the Markov chain represent different possible states of the environment. Using a vanishing discount approach, a

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-dependent, stationary basestock policy that is optimal for the long-run average cost case. We present a procedure for determining the long-run average cost for a given state-dependent basestock policy and provide sufficient conditions for a state-invariant basestock policy to be optimal, with respect to all state

This paper studies the flows of funds into and out of equity mutual funds. Consumers base their fund purchase decisions on prior performance information, but do so asymmetrically, investing disproportionately more in funds that performed very well the prior period. Search costs seem