36th Annual Hawaii International Conference on System Sciences, 2003. Proceedings of the (2003)
Big Island, Hawaii
Jan. 6, 2003 to Jan. 9, 2003
Péter Majlender , Åbo Akademi University
In this paper we shall represent strategic planning problems by dynamic decision trees, in which the nodes are projects that can be deferred or postponed for a certain period of time. Using the theory of real options an enhanced option pricing method is provided, where the relationship of investments is taken into consideration as well, and the optimal path of the decision tree, i.e. the path with the biggest real option value in the end of the planning period will be identified. The theory developed implicitly contains not only the deferral or cancellation flexibility of projects but also the possibility of considering vague informations, which needs to be taken into account when (long-time range) financial decisions are made.
P. Majlender, "Strategic Investment Planning by Using Dynamic Decision Trees," 36th Annual Hawaii International Conference on System Sciences, 2003. Proceedings of the(HICSS), Big Island, Hawaii, 2003, pp. 85a.