The timing of innovation: an interpretation based on real options and game theory

This article focuses on how the use of real options and game theory can provide a decision making tool in the timing of innovation. Focusing on competition, the article reviews the key lessons and implications of real options in the process of decision making. We demonstrate how the use of dynamic net present value (NPV) is more relevant than the static one. Thus, the use of option games hypothesis allows us to propose an extension of traditional games to evolutionary games.
JEL Codes: C73, D43, L22