Faculty & Research

Robert Pindyck

Bank of Tokyo-Mitsubishi Ltd Professor of Economics and Finance
Professor of Applied Economics

Biography | Publications

Robert Pindyck's most recent research focuses on economic policies related to "rare disasters," i.e., those that would severely affect the entire US or world economies. Examples include possible (but low-probability) catastrophic outcomes from global warming or nuclear terrorism. At issue is how such low-probability but extreme outcomes should affect current policy, e.g., to reduce GHG emissions. Pindyck'shas also continued to work on irreversible investment decisions, the role of network effects in market structure, and the behavior of commodity prices. He is the co-author of Investment Under Uncertainty (Princeton University Press, 1994), which demonstrates that the traditional "net present value" rule for capital investment decisions can lead to wrong answers since it ignores the irreversibility of most investment decisions and the option of delaying an investment. Recently, Pindyck has extended these ideas to the timing and design of environmental policy, as well as R&D decisions and patent valuation. His work on network effects focuses on market structure in the pharmaceutical and computer industries. His work on commodity markets examines the random structure of long-term and short-term price evolution and the implications for hedging and investment.

Web Site: http://web.mit.edu/rpindyck/www/