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Green Investment under Policy Uncertainty and Bayesian Learning

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Figure

Figure 1: Binomial tree showing the possible paths of Y over two time steps conditional on θ = 1.
Table 1: Parameter values in base case.
Figure 2: Option value and NPV vs belief of being in the Good state.
Figure 3: The figures show the sensitivity of (a) the option value and (b) the investment threshold to the signal strength.
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