Real Options Analysis: A New Standard for Decision-Making Under Uncertainty

This survey of real options analysis (ROA) discusses its advantages over traditional discounted cash flow (DCF) methods. ROA captures managerial flexibility, values strategic investments more accurately, and fits better with engineering economic decisions. It also outlines modeling challenges and future research needs to make ROA even more practical. The paper argues that real options thinking should be the new norm for evaluating risky, multi-stage investments​