Publication Type
Journal Article
Version
publishedVersion
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
Behavioral Economics | Strategic Management Policy
Research Areas
Applied Microeconomics
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
Citation
FUJII, Tomoki and ISHIKAWA, Ryuichiro.
Arrow-Fisher-Hanemann-Henry and Dixit-Pindyck Option Values Under Strategic Interactions. (2013). Strategic Behavior and the Environment. 3, (3), 169-183.
Available at: https://ink.library.smu.edu.sg/soe_research/1517
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1561/102.00000028