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Real options theory
The big picture
Real options theory is related to decision-making as choosing from a set of possible decisions now, taking into account all decisions that are available to the decision-maker in the future. These future possible decisions are considered as options to the decision-maker: you don’t need to decide yet, you still have the possibility to do so later. It leaves decision-makers with ‘a right, not the obligation,’ to take a (subsequent) decision at a future time. When facing a decision to be taken now, all related decisions at future times must be taken into account.
Real options theory stems from financial ...
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