Research on option game model for real estate project decision making under multi-factors uncertainty

This paper illustrates the use of real options valuation and game theory principles to analyze strategic behavior of the real estate firms under multi-factors uncertainty. The traditional option game model assumes only one factor is uncertainty such as demand or price. In fact, due to the complicated situation, many factors are stochastic which will affect the strategic behavior of the real estate firms. In this paper two stochastic factors are taken into account in the option game model. The two stochastic factors are the number of units (market volume) and the profit per unit. In this condition, we analyze equilibrium strategy through the value and threshold of the leader and follower.