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Perfect foresight.
But perfect foresight is not possible.
It also suggests that carbon prices obtained from perfect foresight energy models might be under-estimated.
Further tests show that "optimal revisions" with perfect foresight of actual earnings also overweight the lower bound.
Start by provisionally assuming a frictionless world in which consumers have perfect foresight and perfect access to capital markets.
Typically, models of induced technological change in climate economics are based on perfect foresight in a deterministic world.
"But frankly, if I had perfect foresight, I would never have taken this job in the first place".
This might work in a world of perfect markets inhabited by perfectly rational individuals with perfect foresight and perfect mobility.
If investors had had perfect foresight of which economies would grow fastest over the following five years, and had invested accordingly, they could have earned 28.8% a year.
Using perfect foresight and adaptive models, this paper examines the effect of competitor asymmetry, consumer sensitivity to incentives and adaptive processes on freeware strategies and competitive outcomes.
This also demonstrates that using perfect foresight optimisation models in tandem with their myopic equivalents can provide valuable indications for policy design.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com