Influence of investor subjective judgments in investment decision-making

By extending the results of previous literature, this study contributes to propose a fuzzy stochastic model for valuing the option to invest in an irreversible investment. The proposed model can provide reasonable ranges of option value, which investors can use to either exercise the option to invest or to delay investment. According to the right and left values of the triangular fuzzy number, investors can interpret the optimal difference based on their individual subjective judgments regarding volatility of future investment values. Finally, in this study two fuzzy goal examples are used to illustrate that the permissible fuzzy option values of pessimistic investors are relatively narrow to optimistic investors.