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The New Option View of Investment

Avinash K. Dixit and Robert S. Pindyck

February 1995

Avinash K. Dixit and Robert S. Pindyck, February 1995

This paper provides a simple introduction to the new option view of investment. We explain the shortcomings of the orthodox theory, and then outline the basic ideas behind the option framework. Several industry examples are briefly discussed.

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