Project Flexibility, Agency, and Competition: New Developments in the Theory and Application of Real Options

Project Flexibility, Agency, and Competition exemplifies how the development and application of the real options paradigm has revolutionized project evaluation and corporate strategy. The first part of the book focuses on the valuation and the exercise of corporate real options, examining situations in which future project cash flows are (at least partially) controllable by management. Part II deals with agency issues, contracts, and incentives, concentrating on agency problems that arise in a dynamic setting when cash flows are controllable and decision makers have private information. Part III deals with the determination of optimal policies and the valuation of flexibility in natural resource investments. The final part of the book looks at strategic options and product market competition, particularly at reactions of outside parties where strategic interactions between agents are important. These reactions naturally lead to game-theoretic or industry equilibrium valuation models.
Project Flexibility, Agency, and Competition is well-suited for corporate executives and students of finance, economics, and engineering management that focus on issues in budgeting or financial theory, and for courses in finance, strategy, and management that deal with options and strategy.

Michael J. Brennan is at Anderson Graduate School of Management University of California at Los Angeles. Lenos Trigeorgis is at University of Cyprus.