Evaluating strategic options using decision-theoretic planning
Information Technology and Management
Investment decisions in the wireless industry applying real options
Telecommunications Policy
Proceedings of the 39th conference on Winter simulation: 40 years! The best is yet to come
International Journal of Electronic Finance
Valuing wireless data services solutions for corporate clients using real options
International Journal of Mobile Communications
Investment project valuation based on a fuzzy binomial approach
Information Sciences: an International Journal
A fuzzy real option approach for investment project valuation
Expert Systems with Applications: An International Journal
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The real options approach is frequently advocated as an approach that offers a positive and radical reassessment of the value of risk and exploration. We examine a recent case where Merck used the real options approach to justify an investment in an R&D project. This case is used to highlight some of the problems associated with using real options. We note that the assumptions incorporated in most standard option valuation models can conflict with the conclusions reached by strategic analysis. As a result, users of real options models should understand the quantitative aspects of these models, and may often need to create a customized model for each situation. The difficulty of developing customized models may explain, in part, the limited use of the real options approach in strategic analysis.