Influence of investor subjective judgments in investment decision-making

Yu-Hong Liu, I. ming Jiang

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

By extending the results of previous literature, this study contributes to propose a fuzzy stochastic model for valuing the option to invest in an irreversible investment. The proposed model can provide reasonable ranges of option value, which investors can use to either exercise the option to invest or to delay investment. According to the right and left values of the triangular fuzzy number, investors can interpret the optimal difference based on their individual subjective judgments regarding volatility of future investment values. Finally, in this study two fuzzy goal examples are used to illustrate that the permissible fuzzy option values of pessimistic investors are relatively narrow to optimistic investors.

Original languageEnglish
Pages (from-to)129-142
Number of pages14
JournalInternational Review of Economics and Finance
Volume24
DOIs
Publication statusPublished - 2012 Oct 1

Fingerprint

Investors
Investment decision-making
Option value
Exercise
Irreversible investment
Stochastic model
Triangular fuzzy number

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

@article{3b4627003fde41a286d60cabc5677f18,
title = "Influence of investor subjective judgments in investment decision-making",
abstract = "By extending the results of previous literature, this study contributes to propose a fuzzy stochastic model for valuing the option to invest in an irreversible investment. The proposed model can provide reasonable ranges of option value, which investors can use to either exercise the option to invest or to delay investment. According to the right and left values of the triangular fuzzy number, investors can interpret the optimal difference based on their individual subjective judgments regarding volatility of future investment values. Finally, in this study two fuzzy goal examples are used to illustrate that the permissible fuzzy option values of pessimistic investors are relatively narrow to optimistic investors.",
author = "Yu-Hong Liu and Jiang, {I. ming}",
year = "2012",
month = "10",
day = "1",
doi = "10.1016/j.iref.2012.01.002",
language = "English",
volume = "24",
pages = "129--142",
journal = "International Review of Economics and Finance",
issn = "1059-0560",
publisher = "Elsevier Inc.",

}

Influence of investor subjective judgments in investment decision-making. / Liu, Yu-Hong; Jiang, I. ming.

In: International Review of Economics and Finance, Vol. 24, 01.10.2012, p. 129-142.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Influence of investor subjective judgments in investment decision-making

AU - Liu, Yu-Hong

AU - Jiang, I. ming

PY - 2012/10/1

Y1 - 2012/10/1

N2 - By extending the results of previous literature, this study contributes to propose a fuzzy stochastic model for valuing the option to invest in an irreversible investment. The proposed model can provide reasonable ranges of option value, which investors can use to either exercise the option to invest or to delay investment. According to the right and left values of the triangular fuzzy number, investors can interpret the optimal difference based on their individual subjective judgments regarding volatility of future investment values. Finally, in this study two fuzzy goal examples are used to illustrate that the permissible fuzzy option values of pessimistic investors are relatively narrow to optimistic investors.

AB - By extending the results of previous literature, this study contributes to propose a fuzzy stochastic model for valuing the option to invest in an irreversible investment. The proposed model can provide reasonable ranges of option value, which investors can use to either exercise the option to invest or to delay investment. According to the right and left values of the triangular fuzzy number, investors can interpret the optimal difference based on their individual subjective judgments regarding volatility of future investment values. Finally, in this study two fuzzy goal examples are used to illustrate that the permissible fuzzy option values of pessimistic investors are relatively narrow to optimistic investors.

UR - http://www.scopus.com/inward/record.url?scp=84862817860&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84862817860&partnerID=8YFLogxK

U2 - 10.1016/j.iref.2012.01.002

DO - 10.1016/j.iref.2012.01.002

M3 - Article

VL - 24

SP - 129

EP - 142

JO - International Review of Economics and Finance

JF - International Review of Economics and Finance

SN - 1059-0560

ER -