COMPUTING COMPETENCIES VALUE THROUGH A FUZZY REAL OPTION MODEL

Lorella Cannavacciuolo, Luigi Iervolino, Luca Iandoli and Giuseppe Zollo
Additional contact information
Giuseppe Zollo: University of Naples Federico II

Fuzzy Economic Review, 2004, vol. IX, issue 1, 3-18

Abstract: This paper presents a fuzzy real option model for the estimation of the value of an investment in individual compe-tencies. The use of the real option technique is justified on the basis of the following hypotheses: i) either deve-loping or acquiring a competency is a financial investment; ii) the value of such an investment can be estimated by assuming that the decision made by a firm either to develop or acquire an individual competency can be consi-dered as buying an option today that will allow the firm itself to exploit a market opportunity in the future by implementing a new productive process Pj; iii) the uncertainty concerning the future value of an investment can be evaluated through a fuzzy model for the estimation of the volatility of the investment itself. Traditional models proposed in literature for the estimation of the volatility are unable to cope with the lack of historical and reliable data that are usually available in financial investments. Second, those models can manage only uncertainty of probabilistic nature. The model proposed attempts to estimate the volatility of an invest-ment when the uncertainty come from possibilistic sources and data are given by imprecise estimations given by human experts assessing the benefits deriving form the implementation of new productive processes.

Keywords: competence; fuzzy logic; intangible investments; real option; volatility. (search for similar items in EconPapers)
JEL-codes: M50 M54 (search for similar items in EconPapers)
Date: 2004
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fzy:fuzeco:v:ix:y:2004:i:1:p:3-18

Access Statistics for this article

More articles in Fuzzy Economic Review from International Association for Fuzzy-set Management and Economy (SIGEF) Contact information at EDIRC.
Bibliographic data for series maintained by Aurelio Fernandez ( this e-mail address is bad, please contact ).