Theoretical And Applied Study On Option Games On The Real Esate Investment Decision Under Finite Economic Life

As one of the pillar industries promoting the economic development, real estate industry is confronted with huge uncertainty when it develops rapidly. In addition, there exists the reciprocal competition in the real estate market. All of above promote developers of real estate,who always utilize the traditional and simple investment decision methodology but have gained great profit in bullish market, to rationally think about and study the scientific investment decision theory under the complex environment. In fact, it is very important and significant for not only developers but also real estate industry to study the scientific investment decision theory and methodology.The traditional real estate investment evaluation methodology, characterized by NPV, neglects flexidility (option) value, so it is a kind of static decision methodology under certainty. Real option pricing methodology considers option value, but it does not consider the competition in real market. That is, it neglects the effect of competition on option value. Option Games, combined by Real Option Theory and Game Theory, is the latest and the most scientific real estate investment decision theory. With the utilization of Option Games to evaluate the real estate project, we can get not only the conclusion of feasibility and time to investment but also the effect of exogenous facts on strategic decision of investors.The dissertation uses the lease-type commercial real estate project as the carrier and the uncertainty of market demand as random variable in order to further consummate the Option Game Estimate Model of real esate investment decision under the visual angle of finite economic life of real estate project. On the basis of the above mentioned, the dissertation firstly studies the real estate investment decision in the symmetric duopoly market; Secondly, under the more usual condition of real estate market the dissertation expands the study into the situation of asymmetric market where the asymmetric dupoly have unequal cost and demand; The last part is the empirical research. The aim of the dissertation is to further consummate the Option Game Evaluation Model of real esate investment decision and further enrich the Option Games evaluation system of real esate investment decision.