Pricing options for acquiring a complete set of land
Abstract/Contents
- Abstract
- Whenever an entrepreneur wishes to acquire unique, complementary assets which are all required to complete a project, the entrepreneur faces the risk of one of the asset owners refusing to sell his asset. This risk is the holdout problem. If the entrepreneur proceeds with buying the assets as he completes negotiations he faces the possibility that one of the remaining owners refuses to sell or demands more than he is willing to pay. Because of this, the entrepreneur faces the prospect of sinking a lot of unrecoverable money into the project only to find out he cannot complete the project. This prospect can diminish the value of the project to the point where the entrepreneur would chose not to attempt it. As a solution to the holdout problem, this thesis proposes the use of options to secure assets for which negotiations have been completed. After negotiations are completed, the entrepreneur pays the owner a small fee up front for the right, but not the obligation, to purchase the asset at a later time. The entrepreneur will then only exercise the option and purchase the asset if he has secured all the assets. This thesis develops a way to price these options so that the entrepreneur can maximize her value by incorporating the outcome of past negotiations and her beliefs about future negotiations. This model allows for the consideration of multiple sets of assets so that the developer has alternatives for completing the project. After the basic model is developed, it is extended to allow for the analysis of more situations.
Description
| Type of resource | text |
|---|---|
| Form | electronic; electronic resource; remote |
| Extent | 1 online resource. |
| Publication date | 2012 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Associated with | Stommes, Jeremy A | |
|---|---|---|
| Associated with | Stanford University, Department of Management Science and Engineering | |
| Primary advisor | Howard, Ronald A. (Ronald Arthur), 1934- | |
| Thesis advisor | Howard, Ronald A. (Ronald Arthur), 1934- | |
| Thesis advisor | Anderson, Terry L. (Terry Lee), 1946- | |
| Thesis advisor | Shachter, Ross D | |
| Advisor | Anderson, Terry L. (Terry Lee), 1946- | |
| Advisor | Shachter, Ross D |
Subjects
| Genre | Theses |
|---|
Bibliographic information
| Statement of responsibility | Jeremy Allan Stommes. |
|---|---|
| Note | Submitted to the Department of Management Science and Engineering. |
| Thesis | Thesis (Ph.D.)--Stanford University, 2012. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2012 by Jeremy A Stommes
Also listed in
Loading usage metrics...