scholarly journals Strategic Investment under Uncertainty: Merging Real Options with Game Theory

Real Options ◽  
2004 ◽  
pp. 97-124
Author(s):  
Kuno J. M. Huisman ◽  
Peter M. Kort ◽  
Grzegorz Pawlina ◽  
Jacco J. J. Thijssen
Keyword(s):  
Game Theory ◽  
Real Options ◽  
Investment Under Uncertainty ◽  
Strategic Investment

scholarly journals Strategic Investment Under Uncertainty: Merging Real Options with Game Theory

2003 ◽  
Author(s):  
Kuno J.M. Huisman ◽  
Peter M. Kort ◽  
Grzegorz Pawlina ◽  
Jacco Thijssen
Keyword(s):  
Game Theory ◽  
Real Options ◽  
Investment Under Uncertainty ◽  
Strategic Investment

Using Real Options Theory to Evaluate Strategic Investment Options for Mobile Content Delivery

2012 ◽  
pp. 310-331
Author(s):  
Divakaran Liginlal ◽  
Lara Khansa ◽  
Stella C. Chia
Keyword(s):  
Real Options ◽  
Strategic Alliances ◽  
Business Models ◽  
Media Industry ◽  
Strategic Investment ◽  
Engineering Managers ◽  
Managerial Flexibility ◽  
Resource Requirements ◽  
New Business ◽  
Mobile Content Delivery

With a rich fare of localized content, but limited regional media outlet channels, mobile content generates new business opportunities for Media News, a small media company with considerable growth potential. Two business models are considered: partnering with wireless service providers and strategic alliances with mobile content syndicators. First, the models are evaluated based on their resource requirements, market share acquisition, revenue generation, and nature, scope and control of content and bandwidth. Then, real options analysis is used to value Media News’ managerial flexibility in responding to uncertainty in investment choices specific to the media industry. The modeling approach, analytical methods, and decision support tools employed in this paper serve as exemplar for engineering managers involved in strategic investment decisions, especially in emerging areas such as mobile commerce.

Using Real Options Theory to Evaluate Strategic Investment Options for Mobile Content Delivery

2010 ◽  
Vol 6 (1) ◽  
pp. 17-37
Author(s):  
Divakaran Liginlal ◽  
Lara Khansa ◽  
Stella C. Chia
Keyword(s):  
Real Options ◽  
Strategic Alliances ◽  
Business Models ◽  
Service Providers ◽  
Growth Potential ◽  
Media Industry ◽  
Strategic Investment ◽  
Real Options Theory ◽  
Engineering Managers ◽  
Mobile Content Delivery

With a rich fare of localized content, but limited regional media outlet channels, mobile content generates new business opportunities for Media News, a small media company with considerable growth potential. Two business models are considered: partnering with wireless service providers and strategic alliances with mobile content syndicators. First, the models are evaluated based on their resource requirements, market share acquisition, revenue generation, and nature, scope and control of content and bandwidth. Then, real options analysis is used to value Media News’ managerial flexibility in responding to uncertainty in investment choices specific to the media industry. The modeling approach, analytical methods, and decision support tools employed in this paper serve as exemplar for engineering managers involved in strategic investment decisions, especially in emerging areas such as mobile commerce.

scholarly journals Does the Market Correctly Value Investment Options?*

2020 ◽  
Vol 24 (6) ◽  
pp. 1159-1201
Author(s):  
Evgeny Lyandres ◽  
Egor Matveyev ◽  
Alexei Zhdanov
Keyword(s):  
Stock Market ◽  
Real Options ◽  
Equity Markets ◽  
Optimal Investment ◽  
Investment Under Uncertainty ◽  
Innovative Firms ◽  
Public Equity

Abstract This paper shows that the stock market misprices firms’ investment options. We build a real options model of optimal investment under uncertainty to estimate the value of firms’ investment options. We show that firms with valuable investment options have a higher likelihood of being mispriced. Importantly, this mispricing is not one-sided, as such firms are equally likely to be undervalued or overvalued. Our paper adds to the debate on whether public equity markets are myopic and systematically undervalue innovative firms. We show that this is not necessarily the case.

scholarly journals Real Options and Discounted Cash Flow Analysis to Assess Strategic Investment Projects

2017 ◽  
Vol 30 (1) ◽  
pp. 91-101 ◽  
Author(s):  
Agnė Pivorienė
Keyword(s):  
Real Options ◽  
Cash Flow ◽  
Flow Analysis ◽  
Investment Decisions ◽  
Business Environment ◽  
Strategic Decision ◽  
Discounted Cash Flow ◽  
Strategic Investment ◽  
Investment Projects ◽  
Real Options Approach

Abstract In today’s uncertain and highly competitive business environment, the difficulty to make strategic investment decisions is growing. The dominant discounted cash flow analysis requires the assumption of perfect certainty of project cash flows. However, under uncertainty traditional DCF approach falls short of providing adequate strategic decision support, and this situation demands new methods for investment evaluation. Real options approach (ROA) has shown the potential for valuation of strategic corporate investment decisions and managerial flexibility in situations of high uncertainty. Under ROA, projects are viewed as real options that can be valued using financial option pricing techniques. This framework allows their owner to keep investment options open and to benefit from the upside potential of an opportunity while controlling the downside risk. The main aim of this research is to investigate the feasibility of real options approach and traditional DCF analysis for assessment of strategic investment projects under environmental uncertainty.

A multi-criteria game theory and real-options model for irreversible ICT investment decisions

2009 ◽  
Vol 33 (10-11) ◽  
pp. 686-705 ◽  
Author(s):  
Georgios N. Angelou ◽  
Anastasios A. Economides
Keyword(s):  
Game Theory ◽  
Real Options ◽  
Investment Decisions
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