Technical uncertainty in real options with learning

Managing Operational Uncertainty with Real Options

The operation of a complex system in a high stakes environment can lead to unacceptable levels of risk. The unintended consequences of system failure or under-performance make it imperative to understand and manage operational uncertainty during the design phase. In order to manage operational uncertainty, this paper presents the application of real options analysis in design. Our approach firs...

Uncertainty , Networks and Real Options ∗

Two pervasive features of industries experiencing rapid technological progress are uncertainty (with regard to the technological feasibility and marketabilility of an innovation) and networks (the dense web of research alliances and joint ventures linking firms to each other). This paper connects the two disparate phenomena using the notion of real options. It visualizes firms as nodes and the ...

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...

Calculating value during uncertainty: Getting real with “real options”

Managing Uncertainty in Socio-Technical Enterprises using a Real Options Framework

Committee: Prof. Daniel E. Hastings, chair; Prof. Deborah J. Nightingale; Dr. Donna H. Rhodes Biography Tsoline Mikaelian is a doctoral candidate in the Department of Aeronautics and Astronautics at MIT. As a member of MIT’s Systems Engineering Advancement Research Initiative (SEAri), her current research focuses on uncertainty management for complex systems and enterprises, supported by Singap...