Information and the concept of option value

W. Michael Hanemann

doi:10.1016/0095-0696(89)90042-9

Information and the concept of option value

W. Michael Hanemann

Research output: Contribution to journal › Article › peer-review

143 Scopus citations

Abstract

This paper examines the Arrow-Fisher-Henry concept of option value and analyzes its properties including its relationship to the value of information and the effects of increasing uncertainty about the future consequences of irreversible development. It is shown that this option value is distinct from but bounded by the value of information in the overall decision problem. Also, it is distinct from a concept of option value that appears in B. S. Bernanke, Quart. J. Econom. 98, 85-106 (1983). However, when there is a continuum of development levels, rather than a binary choice between full development and no development, some of these conclusions need to be modified.

Original language	English (US)
Pages (from-to)	23-37
Number of pages	15
Journal	Journal of Environmental Economics and Management
Volume	16
Issue number	1
DOIs	https://doi.org/10.1016/0095-0696(89)90042-9
State	Published - Jan 1989
Externally published	Yes

ASJC Scopus subject areas

Economics and Econometrics
Management, Monitoring, Policy and Law

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10.1016/0095-0696(89)90042-9

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Information and the concept of option value

Abstract

ASJC Scopus subject areas

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