Comparison of the Datar-Mathews Method and the Fuzzy Pay-Off Method through Numerical Results

Kozlova, Mariia; Collan, Mikael; Luukka, Pasi

doi:10.1155/2016/7836784

Cited by 8 publications

(7 citation statements)

References 32 publications

(40 reference statements)

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“…The triangle’s corner points are defined by the base-, worst-, and best-case scenarios of the investment, while the height is always 1. Kozlova et al ( 2016 ) show that the results of the method are comparable to the results of similar real option approaches such as Mathews et al ( 2007 ). The method can be visualized, which makes it user friendly and intuitive, as it will be shown in the following sections.…”

Section: Literature Reviewmentioning

confidence: 67%

Market-based measures and their impact on green shipping technologies

Metzger

2021

WMU J Marit Affairs

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In the strategy on the reduction of greenhouse gas (GHG) emission of the International Maritime Organization (IMO), market-based measures (MBMs) are considered feasible mid-term measures. Thus, the relevance of MBMs for the shipping industry can be expected to grow in the future and, consequently, carbon and other GHG emissions will impact the investment appraisal for greening technologies. This paper illustrates the impact of carbon pricing on the valuation of greening technologies (especially wind-assisted propulsion technologies) and on the relevant decision-making. In this regard, the straightforward approach of a direct acquisition and installation of the respective technology is considered and compared against innovative financing models, such as shared savings. Hence, the Fuzzy Pay-Off Method (FPOM) is applied in order to visualize the risks and chances linked to MBMs. Due to the economic life of greening technologies, the results are already relevant for today’s investment appraisals, even though carbon pricing has not been enforced so far.

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Section: Literature Reviewmentioning

confidence: 67%

Market-based measures and their impact on green shipping technologies

Metzger

2021

WMU J Marit Affairs

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“…Furthermore, they used fuzzy volatility and dividend variables. Kozlova, Collan and Luukka (2016) compared the Datar-Mathews method based on Monte Carlo simulation, which is probability-based, and the fuzzypayoff method, which is possibility-based, and observed that the results are compliant with each other. Aranda, Arango and Lianos (2016) evaluated the distribution center of an Auxiliary Rail Freight Terminal project by using fuzzy logic and American call options and also in comparison with the Black-Scholes model.…”

Section: Literature Reviewmentioning

confidence: 81%

Intuitionistic Fuzzy Real-Options Theory and its Application to Solar Energy Investment Projects

Ersen

Taş

Kahraman

2018

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Conventional methods used in project evaluation have a static nature, which cause decision makers to examine investment projects within a narrow scope. As an alternative, real-options theory allows decision makers to use the concepts of uncertainty and managerial flexibility, which classical methods do not deal with, in valuing investment projects. Carlsson and Fuller's fuzzy real-options theory has been a solution for situations where cash flow and cost variables used in the model cannot be expressed by using classical numbers but by using fuzzy numbers. The idea of using intuitionistic fuzzy numbers in real options theory can expand the narrow scope more effectively than the idea of using classical real-options theory, thereby providing an opportunity to evaluate investment projects from a wider perspective. In this study, intuitionistic fuzzy real-option valuation model has been developed and applied to the evaluation of solar energy investment projects. Studies have shown that solar energy investments that do not seem profitable today in Turkey can perform profitably in the future. Moreover, the historical volatility model differs from the expected valuable models, whereas the optimum investment year between the models formed by the uncertainty inductions from the expected values exhibit minimal difference.

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“…The results from the method are intuitively understandable and easily be visualized. Uncertainty is presented in a way that is similar to the one commonly used in presenting the results of, e.g., Monte Carlo simulation (Kozlova et al, 2016).…”

Section: Results and Visualizationmentioning

confidence: 99%

“…The FPOM has also previously been used in the analysis of renewable energy investments (Kozlova et al, 2016) and other applications of the method include, e.g., energy and oil investments (Bednyagin and Gnansounou, 2011;Borges et al, 2018), R&D project selection (Hassanzadeh et al, 2012;Collan and Luukka, 2014), patent portfolio management (Collan et al, 2013), valuation of large irreversible investments (Collan, 2011). Most of the previous applications have similarities to RE policy alternative analysis and comparison.…”

Section: Results and Visualizationmentioning

confidence: 99%

Analyzing Renewable Energy Policies – Using the Pay-Off Method to Study the Finnish Auction-Based Renewable Energy Policy

Hietanen¹,

Kozlova²,

Collan³

2020

J ENVIRON INFORM LET

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Design of support-mechanisms is an important component of renewable energy policy. In order to be able to choose desirable designs one must have a good understanding of the most likely outcomes from different policy designsthis calls for proper before-implementation policy analysis and especially for analysis the results of which are intuitively understandable for the decisi onmakers. We propose a simple process, based on the fuzzy pay-off method, for the purpose of analyzing renewable energy support designs in the context of auction-based support mechanism implementation. A numerical case from Finland is used to illustrate the proposed process. The results show that the process is relatively simple to use and able to produce intuitively understandable relevant information for design selection.

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Comparison of the Datar-Mathews Method and the Fuzzy Pay-Off Method through Numerical Results

Cited by 8 publications

References 32 publications

Market-based measures and their impact on green shipping technologies

Market-based measures and their impact on green shipping technologies

Intuitionistic Fuzzy Real-Options Theory and its Application to Solar Energy Investment Projects

Analyzing Renewable Energy Policies – Using the Pay-Off Method to Study the Finnish Auction-Based Renewable Energy Policy

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