Publication Type

Journal Article

Publication Date

2013

Abstract

We extend the Arrow–Fisher–Hanemann–Henry (AFHH) and Dixit–Pindyck (DP) option values to a game situation. By reinterpreting the AFHH option value as a change in the surplus from conservation because of the prospect of future information, we deal with a conceptual difficulty associated with the AFHH option value in the presence of strategic interactions. We then introduce the DP option value into a game situation. We show that the equivalence between the expected value of information and the DP option value in the standard model does not hold under strategic interactions.

Keywords

Irreversibility, quasi-option value, uncertainty, value of information

Discipline

Econometrics | Finance

Research Areas

Econometrics

Publication

Strategic Behavior and the Environment

Volume

3

Issue

3

First Page

169

Last Page

183

ISSN

1944-012X

Identifier

10.1561/102.00000028

Publisher

Now Publishers

Embargo Period

2-23-2014

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1007/BF03353917

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