Developing real option game models

Abstract

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 two decades of real option game models, suggesting which critical problems have been ‘‘solved’’ by considering game theory, and which significant problems have not been yet adequately addressed. We provide some insights on the plausible empirical applications, or shortfalls in applications to date, and suggest some promising avenues for future research.

Publication DOI: https://doi.org/10.1016/j.ejor.2014.02.002
Divisions: College of Business and Social Sciences > Aston Business School
Additional Information: © 2014, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords: finance,real option games,investment analysis,strategic investment
PURE Output Type: Article
Published Date: 2014-09-16
Published Online Date: 2014-02-10
Accepted Date: 2014-02-03
Submitted Date: 2013-01-02
Authors: Azevedo, Alcino (ORCID Profile 0000-0002-4751-6085)
Paxson, Dean

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