REAL OPTIONS VALUATION INC FULL

In this work, we suggest an operational definition of the real option price, and a criterion for deciding whether a given method generates an answer that agrees with this definition. Part of the problem is that, although each proposed method provides an answer (the calculated value), the precise meaning of this value is unclear. Such reluctance is understandable, as many inconsistencies exist in the various methodologies. However, universal acceptance of this methodology has been elusive or even resisted. All rights reserved.Recent years have seen numerous management and petroleum-related articles on the application of financial option techniques to valuation of real assets under uncertainty and operational flexibility. Human papillomavirus multicohort real option vaccination valuation.Ĭopyright © 2013 Elsevier HS Journals, Inc. The real option approach to value uncertainty makes policy making in health care an evolutionary process and creates a new 'space' for decision-making choices. The payoff method showed distinctive advantages in the valuation of the cost-effectiveness of competing health care interventions, essentially determined by the replacement of the nonfuzzy numbers that are commonly used in cost-effectiveness analysis models, with fuzzy numbers as an input to inform the real option pricing method. The simultaneous vaccination of 2 cohorts of girls aged 12 and 15 years yielded a real option value (€17,723) equivalent to that attributed to a single cohort of 12-year-old girls (€17,460). The real option valuation challenged the cost-effectiveness dominance of a single cohort of 12-year-old girls. A net health benefit approach was used to calculate the expected fuzzy net present value for each of the 4 vaccination strategies evaluated.Ĭosts per quality-adjusted life-year gained seemed to be related to the number of cohorts targeted: a single cohort of girls aged 12 years (€10,955 ) revealed the lowest cost among the 4 alternative strategies evaluated.

To inform the real option model, cost-effectiveness data were derived from an empirically calibrated Bayesian model designed to assess the cost-effectiveness of a multicohort HPV vaccination strategy in the context of the current cervical cancer screening program in Italy. The payoff method derives the real option value from the triangular payoff distribution of the project's net present value, which is treated as a triangular fuzzy number. This was the first study, to the best of our knowledge, to use the payoff method to determine the real option values of 4 different HPV vaccination strategies targeting female subjects aged 12, 15, 18, and 25 years. The aim of this article was to discuss the potential advantages shown by using the payoff method in the valuation of the cost-effectiveness of competing HPV immunization programs. Management decisions can be seen as real options, a term used to refer to the application of option pricing theory to the valuation of investments in nonfinancial assets in which much of the value is attributable to flexibility and learning over time.

REAL OPTIONS VALUATION INC FULL

Standard analyses might not capture the full economic value of novel vaccination programs because the cost-effectiveness paradigm fails to take into account the value of active management. A large number of economic evaluations have already confirmed the cost-effectiveness of different human papillomavirus (HPV) vaccination strategies.

Real options valuation inc