Real R & D Options. Quantitative Finance

  • ID: 1766116
  • Book
  • 333 Pages
  • Elsevier Science and Technology
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Real R&D options are among the earliest modelled real options, with now ten primary practical uses: general R&D planning, planning R&D in stages, evaluating test information, new product development timing, operations, abandonment, risk sharing, market funding, industry strategy and regulation.

This book was partly motivated by requests to identify and develop real option models for R&D in telecommunications, petroleum technology and biotechnology. Nine new models cover information and implementation costs, analytical solutions for mean reverting, or fat tailed revenues, endogenous learning and exogenous and experiential shocks, American sequential options, and innovator advantages. Four new applications include forward start development options, exploration options, innovation with information costs, and innovator's real values with changing market share. R&D directors and researchers will find several uses for these models:

  • general R&D planning
  • evaluating test information
  • new product development timing
  • risk sharing
  • industry strategy and regulation
  • A practical guide to how organizations can use Real Option techniques to effectively value research and development by companies
  • Provides a rigorous theoretical underpinning of the use of Real Option techniques
  • Real Options applications are orientated around the economies of North America, Europe and Asia, for an international perspective

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Real R&D option models: classics and development (Paxson)
R&D (Dis)investment decisions (Bieke, Klumpes, Tippett)
Information uncertainty and real options (Bellalah)
Subsidies for R&D investments (Jou, Lee)
A gene to drug venture: Poisson and extreme distribution models
R&D real American sequential investment options (Lee, Paxson)
Implementation uncertainty and investment timing (Tsekrekos)
Review of classical & new real R&D empirical applications (Paxson)
Venture capital investments (Seppa, Laamanen)
Geological uncertainty (Cortazar, Casassus, Schwartz)
Service sector R&D (Warren, Jensen)
Pharmaceutical R&D (Loch, Bode-Greuel)
Electronics R&D new product (Lint, Pennings)
Appendix 1: Models in Excel
Appendix 2: Real R&D Options Database
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Paxson, Dean
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