PAM 200 10.15 - Assume: o A group of Q identical team...

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10/15/07 PAM 200 Theory of the Mine Assume: o a fixed amount of a commodity (oil, good, etc.) o Zero costs of production o Zero storage costs The question is when to sell it o If the objective is to maximize present value of profits (ie maximize profits) (P1Q1)/(1+i)^1 + (P2Q2)/(1+i)^2 + (P3Q3)/(1+i)^3 If Pn/(1+i)^n > Pm/(1+i)^m then we would not sell in year M but might sell in year N Moore’s law, processing power of computers doubles every 18 months Team Production
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Unformatted text preview: Assume: o A group of Q identical team members o They agree to product and share their output equally (ex. communism, sales teams, group projects, families, shareholders, etc.) Principle Agent Problems An owner decides how much profit versus amenities How does the new owner induce the CEO to increase profits? o Production bonuses o Equity (stock options) o Reduce short term behavior o Induce overly risky behavior...
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This note was uploaded on 11/19/2007 for the course PAM 2000 taught by Professor Evans,t. during the Fall '07 term at Cornell University (Engineering School).

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PAM 200 10.15 - Assume: o A group of Q identical team...

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