Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game
Joint Authors
Zhong, Mei-rui
Hong, Kairong
Zeng, Anqi
Huang, Jian-bai
Source
Discrete Dynamics in Nature and Society
Issue
Vol. 2014, Issue 2014 (31 Dec. 2014), pp.1-11, 11 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2014-06-18
Country of Publication
Egypt
No. of Pages
11
Main Subjects
Abstract EN
Aiming at option value of the project and fairness preference psychological utility features, this paper modified objective function between players by option game equilibrium and utility function of project managers by inequity aversion.
Therefore, under the symmetric and asymmetric information conditions, a project capital allocation combination equilibrium decision model has been built.
It draws a conclusion that the option value of projects has changed the utility function of shareholders and managers in capital allocation, whereas fairness preferences of the project managers have changed the way of allocation through psychological utility.
These two effects have influenced the trigger point of capital allocation decision-making.
One is the decrease of trigger point owing to capital allocation decision-making of a CEO affected by the option value; the other is the reaction due to the crowding-out and crowding-in effect of the project manager’s fairness preference, which restrains the severity of underinvestment.
Therefore, a good incentive plan should be a balance among insurance, incentive, and fairness, not only a balance between insurance and incentive.
American Psychological Association (APA)
Zhong, Mei-rui& Zeng, Anqi& Huang, Jian-bai& Hong, Kairong. 2014. Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game. Discrete Dynamics in Nature and Society،Vol. 2014, no. 2014, pp.1-11.
https://search.emarefa.net/detail/BIM-499268
Modern Language Association (MLA)
Zhong, Mei-rui…[et al.]. Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game. Discrete Dynamics in Nature and Society No. 2014 (2014), pp.1-11.
https://search.emarefa.net/detail/BIM-499268
American Medical Association (AMA)
Zhong, Mei-rui& Zeng, Anqi& Huang, Jian-bai& Hong, Kairong. Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game. Discrete Dynamics in Nature and Society. 2014. Vol. 2014, no. 2014, pp.1-11.
https://search.emarefa.net/detail/BIM-499268
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-499268