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Strategic Study of CAE >> 2005, Volume 7, Issue 9

Analysis on Project Investment Decision Based on Down Knock-out Option and Game Theory

1 .Jiangsu Financial Leasing Co., LTD., Nanjing 210018, China

2. Southeast University, Nanjing 210009, China

Received: 2004-11-08 Revised: 2005-01-29 Available online: 2005-09-20

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Abstract

In this paper, firstly, the connotation and the solution of down knock-out option and the basic principle of real option are dissertated, then, the method applied in project investment decision based on down knock-out option and game theory is put forward. And the project pricing in duopoly market structure is mainly analyzed. At last, example is provided.

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