Option Game Pricing Model of RD Alliances with Sequential Investment

摘要

The paper deyeloped a real option game valuation model of R&D alliances with uncertainty involving irreversible sequential investment under option contract. Since there exists moral hazard in R&D alliances, option contracts are an appropriate instrument for resolving the double moral hazard problem of both partners, and the option contract strictly dominates other governance structures in R&D alliances. This paper gives the investment valuation formulas of firm A and B in R&D alliances under option contract, and comparative static analysis with respect to key parameters. These findings should serve as a more accurate valuation model in R&D alliances to avoid overvaluation.