Real options modeling, which extends the ability of option pricing models to evaluate real assets, can be used to evaluate risky projects because of its capacity to handle uncertainties. This research utilizes possibility theory to represent private risks of a project, which are not reflected in the market and hence are not fully evaluated by standard option pricing models. Using a transformati...

Sustainable management of the natural systems is essential in the presence of anthropogenic and natural disasters. Fisher information based measure and hypothesis have been proposed to quantify the sustainability of natural systems, which are used in this work to formulate management objectives. Since uncertainty is omnipresent in natural systems, its consideration is important. Real options th...

Continuous time models in the theory of real options give explicit formulas for optimal exercise strategies when options are simple and the price of an underlying asset follows a geometric Brownian motion. This paper suggests a general, computationally simple approach to real options in discrete time. Explicit formulas are derived even for embedded options. Discrete time processes reflect the s...

A book nearly three years old and now in its third edition would seem an odd choice to review in this journal, particularly since it does not appear to be relevant to the telecommunications industry. It is exactly for this reason that we are reviewing Real Options by Lenos Trigeorgis first published in 1996 -it would not be generally recognized as applicable to the telecommunications industry. ...

Many information resource managers have learned to be proactive in today’s highly competitive business environment. However, limited financial resources and many uncertainties require them to maximize their shareholders’ equity while controlling the risks incurred at an acceptable level. As the unprecedented development in information technology continuously produces great opportunities that ar...

Although real options theory normatively suggests that managers should associate such real options with project value, little field research has been conducted to test whether they suffer from systematic biases in doing so. We draw on the notion of bounded rationality in managerial decision making to explore this understudied phenomenon. Using data collected from managers in 88 firms, we show t...

Real options theory has provided a useful framework for technology investment decision making. Researchers in this area have emphasized the importance of considering the option-like characteristics of IT investment projects. However, unlike financial options, investment in IT projects is typically irreversible: such investment cannot be recovered for other purposes without very costly rework. T...

Farm structure and optimal farm size have always attracted the interest of research as they constitute some of the intense problems of farm efficiency and farm income. Although several approached have been employed to handle with this problem a real options approach can significantly contribute on this matter. This article provides an empirical example of applying real options approach in inves...

This paper discusses a portfolio theory for real assets with main focus on petroleum exploration and development assets. Exploratory assets are prospects with chances to find out development assets (oilfields in this case). By the real options point of view, exploratory assets are compound options. In opposition to financial assets portfolio theory, the paper shows that positive correlation bet...

In this paper, we introduce the Top Limited uncertain interest, and define it as a kind of exotic options. Then we propose a method to valuate the options with Monte Carlo Simulation. We demonstrate a real example from one of China venture capital policies. Our work enriches the exotic option theory, and it’s a remarkable step towards the quantitative analysis of public policies using option th...