A theory of rational short-termism with uncertain betas

@inproceedings{Gollier2013ATO,
  title={A theory of rational short-termism with uncertain betas},
  author={Christian Gollier},
  year={2013}
}
How should one evaluate investment projects whose CCAPM betas are uncertain? This question is particularly crucial for projects yielding long-lasting impacts on the economy, as is the case for example for many green investments. We show that the term structure of the efficient discount rates is not constant and that the uncertainty affecting beta has no effect for short maturities. The term structure of the discount rate is in general increasing and tends to its largest plausible value. This… CONTINUE READING