Fuzzy multicriteria R&D project selection with a real options valuation model

Tolga A. C.

JOURNAL OF INTELLIGENT & FUZZY SYSTEMS, vol.19, pp.359-371, 2008 (SCI-Expanded) identifier identifier identifier

  • Publication Type: Article / Article
  • Volume: 19
  • Publication Date: 2008
  • Doi Number: 10.1111/risa.13391
  • Journal Name: JOURNAL OF INTELLIGENT & FUZZY SYSTEMS
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.359-371
  • Keywords: Real options, fuzzy, TOPSIS, research and development projects, multi-criteria selection
  • Galatasaray University Affiliated: Yes

Abstract

Real options valuation is a financial technique for evaluating investments under conditions of uncertainty, particularly uncertainty associated with market variables such as future product demand or the future value of an asset. The real option value of the investment opportunity is what a value-maximizing firm would pay the right to undertake the investment project with its inherent decision points. This paper proposes a fuzzy multi-criteria R&D project selection methodology based on the hierarchical fuzzy TOPSIS, which includes a fuzzy real options valuation model.