Real option valuation has traditionally been concerned with investment under project value uncertainty while assuming the agent has perfect confidence in a specific model. However, agents do not generally have perfect confidence in their model and this model uncertainty affects their decisions. In this work, we introduce a simple model for real option valuation to account for the agent’s aversi...

Real options theory within the confines of innovation strategy (which states that firms can maximize upside potential whilst limiting down-side risk via engaging in sequential innovation investments that may be terminated (or continued) as uncertainties become clearer over time) has recently been of interest to those studying innovation in global firms. Real Options are purported to help initia...

Existing project performance measures in the infrastructure sector focus on construction (time, cost, quality) and pay less attention to lifecycle performance. The consequence of this shortsighted perspective is that decisions taken early lead poorer solutions. Infrastructure should last centuries quickly becomes inadequate, leading costly reconfigurations. Real options reasoning can help manag...