Study On The Decision-making Of R&D Investment With Option Game Method

R&D(Research & Development) is an important means to enhance competitive power and sustainable development of enterprises, and it is also an important part of enterprise long-term developmental strategy. So, the investment decision-making of a R&D project is very important to enterprises. Although the traditional project investment decision method has considered the reward of time and risk, but it ignores the strategic value of creating following growth opportunities and the flexibility to adjust according to the market changes. Real option theory considers the project uncertainty and flexibility well, but ignores the influence by competitor's strategy. Option game theory and method is the latest development, which combines real option pricing theory and game theory scientifically, provides us a scientific and practical tool for investment decision-making.Firstly, this dissertation is starting from the limitation of traditional evaluation methods, and draws out the real option method. Secondly, option game method is brought out by combining real option theory with game theory, and its general analysis frame is also introduced. Then the option and game characteristic of a R&D project is described. After that, the author carries on the analysis to the value function and the investment marginal value of competitors in a incompletely competition environment by a continual double-head monopoly model. Then, with a discrete double-head monopoly model and a numerical case, the dissertation makes a quantification analyze to the project value under three different competitive structures. Finally, the deficiency of option game theory and method is discussed, including the limitation of domestic practical application.