Arrow-Fisher-Hanemann-Henry and Dixit-Pindyck Option Values Under Strategic Interactions

Tomoki Fujii and Ryuichiro Ishikawa

Strategic Behavior and the Environment, 2013, vol. 3, issue 3, 169-183

Abstract: We extend the Arrow-Fisher-Hanemann-Henry (AFHH) and Dixit-Pindyck (DP) option values to a game situation. By reinterpreting the AFHH option value as a change in the surplus from conservation because of the prospect of future information, we deal with a conceptual difficulty associated with the AFHH option value in the presence of strategic interactions. We then introduce the DP option value into a game situation. We show that the equivalence between the expected value of information and the DP option value in the standard model does not hold under strategic interactions.

Keywords: Irreversibility; Quasi-option value; Uncertainty; Value of information (search for similar items in EconPapers)
JEL-codes: C72 H43 Q50 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Arrow-Fisher-Hanemann-Henry and Dixit-Pindyck option values under strategic interactions (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlsbe:102.00000028

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