Research And Application In Tourism Investment Of Volatility Measure In Real Option Based On System Dynamics

Real option provides scientific investment tools for investors; on the other hand, it scientifically and effectively supports real investment decision-making by catching the opportunities which increases the value of projects in the complicated environment as much as possible.This paper, from a new angel, uses the method of system dynamics to calculate volatility and the entire value of real option based on the process of investment decision-making and various uncertain factors. Due to the great difference about the decision-making procedure and the inner structure of investment system in various fields, so a tourism investment is chose as an empirical case in this paper.This paper first summarizes all kinds of volatility measuring methods and their existing problems, and then analyzes the uncertain factors which determine the value of real option. And establish a system dynamics model on real option investment decision of a tourism investment project. On this basis, get project decision process and value considering the changes of various uncertain factors in the decision-making system through simulation, measuring volatility and the value of real options through changes of the value. And then, through the software of system dynamics, using the model of system dynamics of investment decision-making which is established in this paper to simulate the example of specific tourism investment project and calculates its volatility and value of real option. Finally, this paper offers suggestion of decision-making based on the sequence of simulation and makes further analysis about volatility measurement. The advantages and disadvantages of this new method are then discussed in order to provide more scientific guidance for the investors.