We discuss a couple of important issues in the recent literature on quasi-option value. We show that the assertion that quasi-option value can be negative in a model with independent learning is based on confusion between quasi-option value, which is always positive, and the net benefit of preservation (of a natural environment subject to development), which is not. We also explore the significance of different assumptions about the nature of learning and show that the result that quasi-option value is positive is surprisingly robust.
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law