Publisher Correction: Real options signaling game models for dynamic acquisition under information asymmetry

Strategic Investment under Uncertainty: Merging Real Options with Game Theory

As becomes apparent from the standard text books in industrial organization (cf. Tirole, 1988, The Theory of Industrial Organization), the analysis of the effects of uncertainty within this field is yet underdeveloped. This paper shows that the new theory of strategic real options can be used to fill this gap. Based on the work by Smets (1991) standard models are identified, and they are analyz...

Real options valuation under uncertainty

In this paper we develop a novel valuation model and methodology to value a pharmaceutical R&D project based on real options approach. The real options approach enables the possibility of optimally abandon the project before completion whenever the investment cost turns out to be larger than the expected net cash flow stream. On the other hand, the proposed model accounts for two different sour...

Contracting for Product Support under Information Asymmetry

A Real Options Game Involving Multiple Projects

The equilibrium is derived in a real options game on the basis of a multidimensional state variable. In the game, firms optimize both investment time and project choice in projects that have not been chosen by the leading competitors. We demonstrate how the equilibrium changes with the number of firms, the number of projects, and the correlation between project values. Consistent with previous ...

Combination of real options and game-theoretic approach in investment analysis

Investments in technology create a large amount of capital investments by major companies. Assessing such investment projects is identified as critical to the efficient assignment of resources. Viewing investment projects as real options, this paper expands a method for assessing technology investment decisions in the linkage existence of uncertainty and competition. It combines the game-theore...