Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game
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 con...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Wiley
2014-01-01
|
| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2014/803073 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1832547531841601536 |
|---|---|
| author | Meirui Zhong Anqi Zeng Jianbai Huang Kairong Hong |
| author_facet | Meirui Zhong Anqi Zeng Jianbai Huang Kairong Hong |
| author_sort | Meirui Zhong |
| collection | DOAJ |
| description | 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. |
| format | Article |
| id | doaj-art-cac71e5f417d4c80b49b55cb25d6571d |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2014-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-cac71e5f417d4c80b49b55cb25d6571d2025-02-03T06:44:30ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2014-01-01201410.1155/2014/803073803073Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option GameMeirui Zhong0Anqi Zeng1Jianbai Huang2Kairong Hong3School of Business, Central South University, Changsha 410083, ChinaSchool of Business, Central South University, Changsha 410083, ChinaSchool of Business, Central South University, Changsha 410083, ChinaSchool of Business, Central South University, Changsha 410083, ChinaAiming 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.http://dx.doi.org/10.1155/2014/803073 |
| spellingShingle | Meirui Zhong Anqi Zeng Jianbai Huang Kairong Hong Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game Discrete Dynamics in Nature and Society |
| title | Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game |
| title_full | Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game |
| title_fullStr | Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game |
| title_full_unstemmed | Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game |
| title_short | Project Capital Allocation Combination Equilibrium Decision Model Based on Behavioral Option Game |
| title_sort | project capital allocation combination equilibrium decision model based on behavioral option game |
| url | http://dx.doi.org/10.1155/2014/803073 |
| work_keys_str_mv | AT meiruizhong projectcapitalallocationcombinationequilibriumdecisionmodelbasedonbehavioraloptiongame AT anqizeng projectcapitalallocationcombinationequilibriumdecisionmodelbasedonbehavioraloptiongame AT jianbaihuang projectcapitalallocationcombinationequilibriumdecisionmodelbasedonbehavioraloptiongame AT kaironghong projectcapitalallocationcombinationequilibriumdecisionmodelbasedonbehavioraloptiongame |