We consider the problem of when to deliver the contract payoff, in a continuous-time principal-agent setting, in which the agent's effort is unobservable. The principal can design contracts of a simple form that induce the agent to ask for the payoff at the time of the principal's choosing. The...

Summary This article investigates the derivation of post-tax investment rules and neutral tax systems under risk neutrality and risk aversion for irreversible investment projects. Integrating taxes into real option theory, it can be shown that the possible approaches dynamic programming and...

This paper provides a numerical analysis of investment under uncertainty using Egyptian data. It is based on the theoretical foundations that the irreversibility of investment decisions and the uncertainty about their future rewards create a value to waiting for new information before the firm...

Purpose – The purpose of this paper is to understand current practices in capital budgeting (including real options) in Indian companies and provide a normative framework (guidelines) for practitioners (based on our findings and literature reviewed). Design/methodology/approach – A...

Purpose Using munificence, real options and ambidexterity theories, the purpose of this paper is to demonstrate how the differential between home and host market environmental conditions affects US international franchising expansion. Design/methodology/approach The authors used firm-level panel...

Purpose – The purpose of this paper is to compare investment in innovation (e.g. R&D) between new venture start‐ups before commercialization and operating businesses after commercialization. Design/methodology/approach – Real options methods were used to model a new venture start‐up as a...

Development of large‐scale infrastructure projects that solicits the support of private capital is no longer a new phenomenon. This is commonly implemented using governance arrangements such as Build‐Operate‐Transfer and other technical variations of public‐private partnerships....

This paper proposes a discrete time real options model with time‐dependent and serial correlated return process for a real estate development problem with waiting options. Based on a Martingale condition, the paper claims to be able to relax many unrealistic assumptions made in the typical...

This paper recasts the land development problems of Williams (1991) and Quigg (1993) by explicitly dealing with the effects of scale elasticity of unit rental and unit construction cost in a real estate project. Two different diseconomies of scale constraints are imposed on the rental and cost...

The purpose of this research is to examine the way uncertainty plays a role in built land prices. This paper provides basic real option pricing models of land prices on the demand side in central Tokyo. The model in this research analyzes micro land prices covering individual lot data provided...