This study develops a framework to link the expected utility analysis to real options models in order to capture the joint effects of risk aversion and irreversibility. It aims at modifying the theory of investment under uncertainty by incorporating decision makers' risk preferences and allows...

Considerable research and analyses exist concerning applying the option value to investment decisions. A model has been developed to examine the extent to which two alternative stochastic processes, geometric Brownian motion (GBM) and mean reversion, have impacts on investment decisions. The...

Several empirical studies demonstrated large discrepancies between willingness-to-accept and willingness-to-pay measures. This paper uses an experimental method to determine the extent to which uncertainty about the value of the environmental improvement and the irreversibility of the decision...