Group-Managed Real Options
Event details
| Date | 23.04.2021 |
| Hour | 16:00 › 17:30 |
| Speaker | Lorenzo GARLAPPI, University of British Columbia |
| Location |
Zoom
|
| Category | Conferences - Seminars |
We study a standard real-option problem where decisions are made through voting by a group of agents with heterogeneous beliefs. We show that, when facing both investment and abandonment timing decisions, the group behavior cannot be replicated by that of a representative "median" member. As a result, members' disagreement generates inertia---the group delays investment relative to a single-agent case---and underinvestment---the group rejects projects that are supported by the majority. These coordination frictions hold in groups of any size, for general voting protocols, and are exacerbated by belief polarization.
Links
Practical information
- Informed public
- Free
Contact
- sophie.cadenakauz@epfl.ch