DIFFERENTIAL OPTIMAL INVESTMENT TIMING DECISION MODEL FOR NONLINEAR DYNAMIC URBAN INFRASTRUCTURE PLANNING SYSTEM

Qi-Jie Jiang, Xin-Ying Xu, Ahmad Madani Sabban () and Chuan-Bin Yin
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Qi-Jie Jiang: Business School, Chengdu University, Chengdu 610106, P. R. China
Xin-Ying Xu: ��Economic School, Erasmus University Rotterdam, Rotterdam 3000 DR, Netherlands
Ahmad Madani Sabban: ��Department of Information Technology, Faculty of Computing and Information Technology, King Abdulaziz University, Jeddah, Saudi Arabia
Chuan-Bin Yin: �Tourism and Urban Management School, Jiangxi University of Finance and Economics, Nanchang 330013, P. R. China

FRACTALS (fractals), 2022, vol. 30, issue 02, 1-8

Abstract: With the acceleration development of urbanization, the infrastructure construction plays an increasingly crucial role in the expansion process of cities. However, the existing decision-making methods of urban infrastructure investment still stay at the static level, resulting in a huge waste of resources, which does not meet the needs of dynamic urban development and management. Based on geometric Brownian motion, option function and the theory of real option, this paper establishes a dynamic differential optimal investment opportunity decision model applied to urban infrastructure construction. An example was then conducted to test the operability and application of the proposed model. The results confirm that the proposed approach contributes to improving the scientificity of urban infrastructure planning and construction, and realizing the maximization of infrastructure’s social value. Meanwhile, this paper contributes to promoting the development of city infrastructure investment decision-making methods from static to dynamic, and from partial to overall.

Keywords: Nonlinear Dynamic System; Optimal Investment Decision; Urban Infrastructure Planning; Geometric Brownian Motion; Option Function (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S0218348X22401077

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