MULTIPLE EQUILIBRIA IN GAME THEORY: SHARING PROFITS VS. MARKET PRICE

Gianluca Marcato () and Giovanni Limentani

ERES from European Real Estate Society (ERES)

Abstract: The application of game theory to real option analysis is useful to understand the interaction between agents and the reason why developers tend to develop earlier than expected. Using a discrete time model, we critically present the limits of the Smit and Ankum (1993) model and propose a modified version of the same by assuming a profit sharing market environment to overcome multiple equilibria (i.e. situations where rules of thumb are used to determine the agents' profit). Finally, we introduce a speed of reaction to test different competition levels and we numerically show that the aggressiveness of developers reduces option values.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2010-01-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://eres.architexturez.net/doc/oai-eres-id-eres2010-199 (text/html)

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:arz:wpaper:eres2010_199

Access Statistics for this paper

More papers in ERES from European Real Estate Society (ERES) Contact information at EDIRC.
Bibliographic data for series maintained by Architexturez Imprints ().