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A Fuzzy Group Decision Approach to Real Option Valuation

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Rough Sets, Fuzzy Sets, Data Mining and Granular Computing (RSFDGrC 2007)

Part of the book series: Lecture Notes in Computer Science ((LNAI,volume 4482))

Abstract

This paper develops a comprehensive but simple methodology for valuating IT investment using real options theory under the fuzzy group decision making environment. The proposed approach has the following advantages: (1) It does not need to formulate the distribution of expected payoffs, thus complex estimation tasks can be avoided. (2) It allows multiple stakeholders be involved in the estimation of real option value, therefore could alleviate the bias from particular evaluator’s personal preference and could help decision makers achieve a more reliable valuation of the target investment. The author provides numerical illustration on the procedures mentioned above and discusses the strengths and possible extensions of this hybrid approach to IT investment analysis.

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Author information

Authors and Affiliations

  1. School of management, Huazhong University of Science and Technology, Wuhan, 430074, China

    Chen Tao, Zhang Jinlong, Yu Benhai & Liu Shan

Authors
  1. Chen Tao
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  2. Zhang Jinlong
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  3. Yu Benhai
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  4. Liu Shan
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Editor information

Editors and Affiliations

  1. Dept. of Computer Science and Engineering, York University, M3J 1P3, Toronto, Ontario, Canada

    Aijun An

  2. Institute of Computing Sciences, Poznań University of Technology, ul. Piotrowo 2, 60–965, Poznań, Poland

    Jerzy Stefanowski

  3. Department of Applied Computer Science, University of Winnipeg, R3B 2E9, Winnipeg, Manitoba, Canada

    Sheela Ramanna

  4. Department of Computer Science, University of Regina, S4S 0A2, Regina, Saskatchewan, Canada

    Cory J. Butz

  5. Department of Electrical and Computer Engineering, University of Alberta, T6G 2V4, Edmonton, Alberta, Canada

    Witold Pedrycz

  6. Institute of Compuer Science and Technology, Chongqing University of Posts and Telecommunications, 40065, Chongqing, P.R. China

    Guoyin Wang

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© 2007 Springer-Verlag Berlin Heidelberg

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Cite this paper

Tao, C., Jinlong, Z., Benhai, Y., Shan, L. (2007). A Fuzzy Group Decision Approach to Real Option Valuation. In: An, A., Stefanowski, J., Ramanna, S., Butz, C.J., Pedrycz, W., Wang, G. (eds) Rough Sets, Fuzzy Sets, Data Mining and Granular Computing. RSFDGrC 2007. Lecture Notes in Computer Science(), vol 4482. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-72530-5_12

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  • DOI: https://doi.org/10.1007/978-3-540-72530-5_12

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-540-72529-9

  • Online ISBN: 978-3-540-72530-5

  • eBook Packages: Computer ScienceComputer Science (R0)

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