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Appears in Information Systems Research, Vol. 10, No. 1, pp. 70-86, 1999. A CASE FOR char human activityer REAL OPTIONS PRICING ANALYSIS TO EVALUATE INFORMATION utilize science PROJECT INVESTMENTS Michel Benaroch Associate professor of Information Systems give instruction of Management, siege of Syracuse University Tel: 315-443-3492, Fax: 315-443-5457 Email: mbenaroc@syr.edu Robert J. Kauffman Associate Professor of Information Systems and ratiocination Sciences Carlson School of Management, University of Minnesota 271 19th road South Minneapolis, MN 55455 Tel: 612-624-8562, Fax: 612-626-1316 Email: rkauffman@csom.umn.edu ABSTRACT The act of fundamental woof set puts (OPMs), such(prenominal) as the binomial and the Black-Scholes models, to problems in breeding technology (IT) investment decision making give been the work of some debate in the last few years. front seek, for example, has made the case that pricing in truthistic options in real world operati onal and strategic settings offers the potential for effective insights in the evaluation of irreversible investments under uncertainty.

However, most authors in the IS literary productions have made their cases using illustrative, rather than echt real world examples, and have always concluded with caveats and questions for time to come research about the applicability of such methods in practice. This composition makes trey important contributions in this context: (1) it provides a buckram hypothetical grounding for the validity of the Black-Scholes option pricing model in the context of the spectrum of capit al budgeting methods that might be industrio! us to esteem IT investments; (2) it shows why the assumptions of both the Black-Scholes and the binomial option pricing models note constraints on the range of IT investment situations that one substructure measure out that are similar to those implied by tralatitious capital budgeting methods such as discounted cash flow epitome; and (3) it presents the first application of the Black-Scholes model that uses a real world...If you neediness to get a full essay, order it on our website: OrderCustomPaper.com

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