This paper gives an overview of simulation based procedures, which have proved to be efficient in valuing American options and therefore real options. Many of them integrate sequential stochastic simulations in the backward recursive programming approach to determine the early-exercise frontier....

Malpractice in food production entails unacceptable procedures and undesirable product qualities and other negative material outcomes. Despite their physical implications, behavioural sources of risk have become known as moral hazards. The probability of malpractice increases with attached...

Farm-level adaptation to changing economic environments is often slower than expected. Technological innovations, for instance, are frequently adopted at a later date than the net present value of investment suggests. This can be explained by a model of "investment under uncertainty," which...

Investment decisions are not only characterised by irreversibility and uncertainty but also by flexibility with regard to the timing of the investment. This paper describes how stochastic simulation can be successfully integrated into a backward recursive programming approach in the context of...

Optimization has been recognized as a powerful tool in teaching and research for a long time. In spite of its well known problem solving capacity, some methodological obstacles have persisted over the years. The main problem is that stochastic variables and their correlations cannot be...

Investment decisions are, as a rule, characterized by uncertainty, irreversibility and flexibility. Simple net present value calculations will not account for these features. In many situations even flexible investment planning with decision trees, which represents the most advanced method of...