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One of the potential pitfalls of real options analysis is that managers may have the incentive and know-how to game the system. a. True b. False
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One of the potential pitfalls of real options analysis is that managers may have the incentive and know-how to game the system.

a. True
b. False

User Huy Hoang
by
5.5k points

1 Answer

1 vote

Answer:

True

Step-by-step explanation:

This is true and a pitfall because managers particularly those in investment businesses can take actions that benefit themselves or act based on self interests. This is because they are open to incentives and also have the know how so they can easily make changes. This is bad for real options analysis. It is an agency issue. These people act without even considering the interests of the organization or that of their employers.

User Jacob Penney
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