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A practical method for incorporating Real Options analysis into US federal benefit-cost analysis procedures

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dc.contributor.advisor Richard de Neufville. en_US Rivey, Darren en_US
dc.contributor.other System Design and Management Program. en_US 2008-11-07T19:02:34Z 2008-11-07T19:02:34Z 2007 en_US 2007 en_US
dc.description Thesis (S.M.)--Massachusetts Institute of Technology, System Design and Management Program, 2007. en_US
dc.description Includes bibliographical references (p. 77-83). en_US
dc.description.abstract This research identifies how Real Options (RO) thinking might acceptably and effectively complement the current mandates for Benefit-Cost Analysis (BCA) defined by the Office of Management and Budget (OMB) in Circular A-94. The research examines opportunities for improving economic analysis using mandated rules for a large complex system, highlights where improvements can be made with RO thinking, and proposes a framework that can be optionally and generically applied to mandated decisionmaking guidelines. The framework relies on a simple spreadsheet analysis that is augmented with Monte-Carlo simulation. The proposed approach complements existing practices and should be easy to integrate with current tools, procedures, staff, and resources.This approach builds upon a careful analysis of Federal mandates for benefit-cost analyses, the implementing directions of the OMB, and the way these guidelines are followed by practitioners who have to deal with the particularities that exist in the field. The current practice was determined by examining several case studies of work for the Federal Aviation Administration (FAA) and through discussions with FAA officials knowledgeable about the BCA methods in practice. The proposed approach with FAA Airport Benefit-Cost Analysis Guidelines was applied to a Hypothetical Project for illustrative purposes. en_US
dc.description.statementofresponsibility by Darren Rivey. en_US
dc.format.extent 97 p. en_US
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri en_US
dc.subject System Design and Management Program. en_US
dc.title A practical method for incorporating Real Options analysis into US federal benefit-cost analysis procedures en_US
dc.title.alternative Practical method for incorporating RO analysis into United States federal BCA procedures en_US
dc.type Thesis en_US S.M. en_US
dc.contributor.department System Design and Management Program. en_US
dc.identifier.oclc 244635823 en_US

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