Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10483602 | Resource and Energy Economics | 2005 | 6 Pages |
Abstract
Fisher (2000, this journal) offers a unifying framework for the concepts of quasi-option value, suggested by Arrow, Fisher, Hanemann, and Henry (AFHH), and the concept of real option value, suggested by Dixit and Pindyck (DP). He claims that the two concepts are equivalent. We argue that this claim is not correct. We further suggest a decomposition of the DP option value into two components, one of which corresponds exactly to the AFHH quasi-option value which captures the value of obtaining new information, and a second one which captures the postponement value irrespective of uncertainty.
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Physical Sciences and Engineering
Energy
Energy (General)
Authors
Paul Mensink, Till Requate,