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Columbia University ECON V3265 Question 1 [16 points] Consider an economy with three dates (T=0, 1, 2) and the following investment opportunity. If an agent invests $1 in a project at T=0, the project yields $8 at T=2. The project can be liquidated at T=1 but early liquidation yields $1 at T=1. An agent has $1 and can be of two types. With probability 0.5 the agent is a type- ...[Show More]

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