Incorporating Overconfidence into Real Option Decision-Making Model of Metal Mineral Resources Mining Project | Zendy

Jianbai Huang | Zendy; Na Tan | Zendy; Meirui Zhong | Zendy

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Incorporating Overconfidence into Real Option Decision-Making Model of Metal Mineral Resources Mining Project

Author(s) -

Jianbai Huang,

Na Tan,

Meirui Zhong

Publication year - 2014

Publication title -

discrete dynamics in nature and society

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.264

H-Index - 39

eISSN - 1607-887X

pISSN - 1026-0226

DOI - 10.1155/2014/232516

Subject(s) - overconfidence effect , value (mathematics) , computer science , mineral resource classification , decision model , machine learning , geology , psychology , geochemistry , social psychology

As for uncertainties and decision-makers’ overconfidence psychological bias, overconfidence has been incorporated into real option decision-making model of metal mineral resources mining to estimate its effect on decision-making of the project and thus a behavioral real option decision-making model of metal mineral resources mining based on overconfidence has been established. Furthermore, numerical simulation and sensitivity analysis have been conducted to verify the practicality of the model. Results show that model in this paper has greatly changed trigger value and option value of mineral resources mining project compared with traditional real option model, thus greatly changing optimal decision results. Incorporating overconfidence into real option decision-making model of metal mineral resources development is a crucial extension of project evaluation theory

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