On the Option Game Model of the Investment Decisions for Radical Technology Innovation in Enterprises

Abstract

Abstract:

Based on introducing the characteristics of project investment in enterprises, the Approach of Poisson Distribution is led into this paper to analyze the evolution process of radical technology innovation in enterprises, with the further combination of relevant literatures and decision practices, the option game model for it is constructed, aiming to analyze three such cases as positive jump, negative jump and uncertainty that project benefits and the cost of inputs have produced, influenced by the disruptive technology innovation of enterprises. Therefore, the values of investment opportunities and the investment threshold of radical technology innovation projects are respectively obtained. The research indicates that in the decision-making of investment for the project of radical technology innovation in enterprises, two major factors that affect investment decisions are to achieve the jump of the project value caused by the radical technology innovation and its frequency. The radical technology innovation enables businesses to obtain sustainable development, and crack the bottlenecks and barriers that exist in their process of development, thus achieving a virtuous cycle of sustainable development.

Key words: radical technology innovation, options, game, investment decision

Liu Weibai, Li Zhong. On the Option Game Model of the Investment Decisions for Radical Technology Innovation in Enterprises[J]. , 2016, 28(4): 89-97.

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