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Numerical Study

  • Christian ArtmannEmail author
Chapter
  • 832 Downloads
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 620)

Abstract

The analysis of our information updating valuation model in the previous section allowed us to derive several properties in closed form, e.g., the impact of a pure mean or a pure variance update, the effect of the uncertainty reduction on the (expected) value of information, and the role of the updating point in time on the expected project value. Other aspects, like the impact of a simultaneous mean-variance update on the project value or threshold values for a change of the underlying cost structure, turned out to be case dependent and hence, eluded a closed form analysis. For those properties, we will therefore resort to a numerical study in this chapter in order to derive further insights about our information updating model. Our objective is hereby 1) to illustrate the derived properties by studying a real NPD project example, 2) to study the impact of a general (i.e., both mean and variance) update of the market requirement distribution on the project value, 3) to analyze the effect of the update on the optimal managerial policy, and 4) to study the impact of the underlying model parameters on the expected project value and expected value of information.

Keywords

Payoff Function Valuation Model Uncertainty Structure Uncertainty Reduction Market Requirement 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2009

Authors and Affiliations

  1. 1.ImmenstadtGermany

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