Technology Investment based on Options Game Analysis

L.-C. Wu, S.-H. Li, C.-S. Ong, and C. Pan (Taiwan, China)


Strategic Investment Decision, Real Options, Game Theory, TFT-LCD


The Thin Film Transistor–Liquid Crystal Display (TFT LCD) industry has emphasized the huge capital investment as key success factor. Traditional Net Present Value (NPV) rule is a now-or never rule that fails to capture the managerial flexibility, which is most valuable to investments that involve huge uncertainty and irreversibility. In this paper, we analysis the investment strategies of the TFT-LCD industry with the combination of real options and game approach. Based on the real world data, the empirical results that real options reveal more value that NPV fails to consider. Besides, different investment strategies were analyzed with game theory, with which how the strategy equilibrium are achieved over competing rivals are also provided in the study.

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