Building on earlier work to incorporate real option methodologies into network modeling, two models are proposed. The first is the network option design problem, which maximizes the expanded net present value of a network investment as a function of network design variables with the option to defer the committed design investment. The problem is shown to be a generalized version of the network ...

By mixing concepts from both game theoretic analysis and real options theory, an investment decision in a competitive market can be seen as a “game” between firms, as firms implicitly take into account other firms’ reactions to their own investment actions. We review several real option game models, suggesting which critical problems have been “solved” by considering game theory, and which sign...

• Subjective real option valuation uses same data inputs as traditional DCF analysis. The value of delay stems from the investor’s subjective views about risk premia. Cost and revenue uncertainties have complex effects on value. Hedging systematic can reduce delaying investment. may increase or decrease with idiosyncratic, un-hedgeable risk. We model investor heterogeneity using different requi...