Quasi-option Value under Strategic Interactions
We consider a simple two-period model with irreversible investment with strategic interactions. In this setup, we try to extend the concept of the quasi-option value (QOV) by Arrow and Fisher (1974), Henry (1974), Fisher and Hanemann (1987) and Hanemann (1989) to a game-theoretic situation. In doing so, we demostrate some conceptual difficulties with the QOV, and stress the potential importance of information-induced inefficiency. We also show that this inefficiency can be remedied by incorporating sophisticated control of information flow. Our model is potentially applicable to various global environmental problems.
|Date of creation:||Mar 2011|
|Publication status:||Published in SMU Economics and Statistics Working Paper Series|
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- Bruno Bassan & Olivier Gossner & Marco Scarsini & Shmuel Zamir, 2003.
"Positive value of information in games,"
International Journal of Game Theory,
Springer;Game Theory Society, vol. 32(1), pages 17-31, December.
- Bruno Bassan & Olivier Gossner & Marco Scarsini & Shmuel Zamir, 2001. "Positive value of information in games," ICER Working Papers - Applied Mathematics Series 26-2003, ICER - International Centre for Economic Research, revised Jul 2003.
- Bruno Bassan & Olivier Gossner & Marco Scarsini & Shmuel Zamir, 2001. "Positive value of information in games," Discussion Paper Series dp294, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem, revised Jul 2002.
- Marco Scarsini & Bruno Bassan & Olivier Gossner & Shmuel Zamir, 2003. "Positive value of information in games," Post-Print hal-00539798, HAL.
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- Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-1012, December.
- Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, Oxford University Press, vol. 88(2), pages 312-319.
- Fisher, Anthony C., 2000. "Investment under uncertainty and option value in environmental economics," Resource and Energy Economics, Elsevier, vol. 22(3), pages 197-204, July.
- Fisher, Anthony C. & Hanemann, W. Michael, 1987. "Quasi-option value: Some misconceptions dispelled," Journal of Environmental Economics and Management, Elsevier, vol. 14(2), pages 183-190, June.
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