Real Options
Version 1.0.0 · Updated 2026-07-31
CORE DEFINITION
In business investment, instead of making an immediate life-or-death decision, pay a small cost (option premium) to retain the right to choose in the future (e.g., expand, abandon, delay).
SCAFFOLDING EFFECT
Reduce cognitive load
Strategic positioning. Facing uncertainty, do not go all-in or give up completely. Spending a small amount on an MVP (minimum viable product) or pilot is like buying a 'call option'. If things go well, invest more; if not, exit with limited losses and unlimited upside.
Anchor fast decisions
Investment can be decomposed under uncertainty into 'pay a small cost now, retain future options': options to delay, expand, contract, abandon, switch, etc. Limited downside (option premium), potential upside, better than one-time all-in or complete abandonment, turning uncertainty into a source of value.
MINIMUM ACTION
In progress 0/5Practice this model in one real situation:
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Real_options_valuationverified
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