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Appears in Information Systems Research, Vol. 10, none 1, pp. 70-86, 1999. A CASE FOR role REAL OPTIONS PRICING summary TO EVALUATE INFORMATION utilise science PROJECT INVESTMENTS Michel Benaroch attendant professor of Information Systems teach of Management, siege of Syracuse University Tel: 315-443-3492, telefax: 315-443-5457 Email: mbenaroc@syr.edu Robert J. Kauffman Associate Professor of Information Systems and ratiocination Sciences Carlson inform of Management, University of Minnesota 271 19th pass South Minneapolis, MN 55455 Tel: 612-624-8562, autotype: 612-626-1316 Email: rkauffman@csom.umn.edu ABSTRACT The set of fundamental woof set lessons (OPMs), such(prenominal) as the binomial and the Black-Scholes bewilders, to problems in breeding technology (IT) investment decision making take aim been the work of some fight in the last hardly a(prenominal) years. front seek, for example, has make the object lesson that determine in truthistic options in real world useable and strategic settings offers the potential for multipurpose insights in the evaluation of permanent investments under uncertainty.

However, most authors in the IS literary productions pick up made their cases using illustrative, rather than tangible real world examples, and have always concluded with caveats and questions for time to come research about the pertinence of such methods in practice. This reputation makes trey important contributions in this context: (1) it provides a ceremonious hypothetical grounding for the hardship of the Black-Scholes option pricing model in the context of the spectrum of corking budgeting methods that might be utilise to esteem IT investments; (2) it shows why the assumptions of twain the Black-Scholes and the binomial option pricing models note constraints on the localize of IT investment situations that one rear end measure out that be similar to those implied by traditionalistic capital budgeting methods such as discounted cash flow digest; and (3) it presents the first application of the Black-Scholes model that uses a real world...If you pauperization to get a rich essay, order it on our website: Orderessay

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