This paper presents a real options model of alliance formation between two firms for entry in a new market and analyzes how different compensation measures affect the alliance timing and option values. Generally, when profit structures of the two firms before and after an alliance are different,...

This paper utilizes a real options and game-theoretic approach to consider the strategic real investment in a duopoly market under uncertainty with time-inconsistent preferences resulting from quasi-hyperbolic discounting. We show that the time-consistent agent becomes the leader when s/he...