Technology Investment: A Game Theoretic Real Options Approach.

Abstract

The technology investment decision of an individual firm has become a very complex matter in recent years. One reason is the incredibly rapid progress of technological developments in the last decades. Another reason is the existence of and movement towar oligopolistic markets. In this thesis several theoretical technology investment models of the firm are developed and analyzed. To solve these models real options theory and game theory is used. The real options theory makes it possible to explicitly take nto account (and value) the option value of waiting. Game theory is used to incorporate strategic interactions.