Hsu, Jason C.; Schwartz, Eduardo S. - In: Insurance: Mathematics and Economics 43 (2008) 3, pp. 350-367
We develop a real options model of R&D valuation that takes into account the uncertainty in the quality (or efficacy) of the research output, the time and cost to completion, and the market demand for the R&D output. The model is then applied to study the problem of pharmaceutical...