Several researchers have proposed modeling temporally abstract actions in reinforcement learning by the combination of a policy and a termination condition, which we refer to as an ”option”. Value functions over options and models of options can be learned using methods designed for semi-Markov decision processes (SMDPs). However, these methods all require an option to be executed to terminatio...

Introduction: Research has asserted MCQ items using threeresponse options (one correct answer with two distractors) iscomparable to, and possibly preferable over, traditional MCQitem formats consisting of four response options (e.g., one correctanswer with three distractors), or five response options (e.g., onecorrect answer with four distractors). Some medical educatorshave also adopted the pr...

We consider series solutions for the location of the optimal exercise boundary of an American option close to expiry. By using Monte Carlo methods, we compute the expected value of an option if the holder uses the approximate location given by such a series as his exercise strategy, and compare this value to the actual value of the option. This gives an alternative method to evaluate approximat...

The vague notion of "probabilistic patents" is formalized through a model which combines real option theory and a fuzzy methodology. The imprecise estimates the patent holder possesses about her future profits, the validity and scope of the patent, the litigation costs, the court's decision etc. under a regime of imperfect enforcement of property rights are specified modelling uncertainty with ...

High fossil fuel prices have rekindled interest in nuclear power. This paper identifies specific nuclear characteristics making it unattractive to merchant generators in liberalized electricity markets, and argues that non-fossil fuel technologies have an overlooked ‘option value’ given fuel and carbon price uncertainty. Stochastic optimization estimates the company option value of keeping open...

Exercising real options often requires an implementation time, whereas financial options can be exercised instantly. Neglecting the implementation time needed to exercise a real option causes overvaluing that option. We develop lattice and Monte Carlo simulation techniques to value real option problems, where exercising the option requires an implementation time. We present the application of t...

Daily harvest limits are a common form of regulation in consumptive recreation. We show that angler willingness to pay for bag limit change is an option price and how it relates the value changes. Specifically, if expected utility theory holds, then prices one-fish increments along with catch distributions can be used “recover” compensating surplus (CS) increments. also further assumptions (e.g...

This paper explores both theoretically and empirically whether or not the willingness to pay (WTP) for pollution control varies with income. Our model indicates that the income elasticity of the marginal WTP for pollution reduction is only constant under very restrictive conditions, which are not necessary for an environmental Kuznets curve relationship between pollution and income. Our empiric...