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SUMMARY:Group-Managed Real Options - Lorenzo Garlappi (Sauder)
DTSTART:20210603T120000Z
DTEND:20210603T130000Z
UID:TALK150301@talks.cam.ac.uk
CONTACT:CERF/CF Admin
DESCRIPTION:We study a standard real-option problem where sequential decis
 ions are made through voting by a group of members with heterogeneous beli
 efs. We show that\, when facing both investment and abandonment timing dec
 isions\, the group behavior cannot be replicated by that of a representati
 ve ``median'' member. As a result\, members' disagreement generates inerti
 a---the group delays investment relative to a single-agent case---and unde
 rinvestment---the group rejects projects that are supported by a majority 
 of members\, acting in autarky. These coordination frictions hold in group
 s of any size\, for general voting protocols\, and are exacerbated by beli
 ef polarization.
LOCATION:Online
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