We show that the discrete real option game model proposed in the recent literature can be extended to the case of imperfect information. As a result, the model can cover a wider range of applications. However, we also observe that the effectiveness of implementing the subsidy is affected by the...

We explore the question of whether entrepreneurial education matters for medium-sized venture performance. We do so to better understand the conflicting evidence indicating that, while such education appears to have significant positive micro-level effects, it has no significant macro-level...

The untapped potential of wave energy offers another alternative to diversifying renewable energy sources and addressing climate change by reducing CO2 emissions. However, development costs to mature the technology remain significant hurdles to adoption at scale and the technology often must...

This study aims to develop an accurate option pricing model for car leases by introducing a put option valuation framework based on the Weibull distribution. Traditional models typically assume asset values follow a lognormal distribution, failing to capture the left-skewed nature and bounded...

In this paper, we investigate the strategic decision-making process of a Maintenance Repair and Overhaul (MRO) company considering the installation of a remanufacturing facility under product sourcing cost uncertainties (e.g., purchasing new products from third-party, and remanufacturing used...

Climate change and its two-way relation with economic activity is stochastic and so is therefore the optimal tax internalizing the climate externality. But with capital irreversibility a stochastic time path for carbon prices slows down the reallocation from brown to green sectors because...

In this article we study start-up investments in developing countries. Using a representative firm, we wonder how relevant are the effects of taxation and risk on new business activities. It is worth noting that developing countries are usually characterized by three main characteristics....

The paper highlights the encountered problems in implementing real options under more realistic assumptions such as business cycle risk and normally distributed cash flows. The problems considered include (i) estimating empirical distribution of cash flows from real option investments; (ii)...

Since subsidies for fossil-fuel producers entail "carbon locked-in" risks, phasing out the subsidies is widely agreed to be critical for progress on climate change towards carbon neutrality. However, due to the uncertainties and irreversibilities associated with environmental degradation and...

Under the UN sustainable development goals (SDGs), the United States (US) and China have ambitious environmental, social, and governance (ESG) investment plans. However, dichotomy is found in the literature about how rising ESG practices affect firm value (FV). This study examines the linear and...

We consider a model of innovation that distinguishes between ideas and innovations. While innovation responds to incentives, ideas are a scarce resource that provide an exogenous constraint on the rate of innovation. We investigate how the optimal reward structure is shaped by the scarcity of...

We study business uncertainty in high- versus low-volatility environments by surveying over 31,000 managers across 41 countries. We elicit subjective probability distributions for future own-firm sales and measure firm-level uncertainty with their mean absolute deviations. Analogously, we...

Developing countries have recently proved reluctant to participate in sovereign debt moratoria and debt relief initiatives. We argue that debtors' (non-)participation decisions can be understood through the lens of real options. Eligible countries compare the net benefits of participating in a...

The objective of this paper is to transfer the real options valuation approach to investments in organizational resources and capabilities which have been exten-sively discussed within the resource-based approach of strategic management. The paper starts with the analysis of fundamental...

We study a novel mechanism through which real options play a prominent role in inducing the skewness of stock returns. Building on the investment-based asset pricing framework, we show that firms’ real options to contract (expand) their businesses when productivity is low (high) can increase...

The purpose of this research is to develop a cost estimation model of a project with its real options. This issue is particularly attributed to the selection of an adequate evaluation model. However, despite the high computational accuracy of a particular model, it can scarcely ever meet the...

The purpose of this paper is to apply such a technology to develop an innovation strategy for the pilot clusters defined by the state, which would allow to make flexible management decisions. The proposed method for this involves the use of a compound real option, which includes the following...