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Summary: 1
A Real Options Framework for Space Mission Design
Andrew A. Gray, Payman Arabshahi, Elisabeth Lamassoure, Clayton Okino, Jason Andringa
Jet Propulsion Laboratory
Pasadena, CA 91109
{gray,payman,elama,okino, andringa}@jpl.nasa.gov
Abstract--a real options framework for use in space
mission design is presented. Such a framework has
potential application in architecting flexibility in certain
mission designs with the objective of maximizing mission
utility. It integrates economic principles of cost, return,
risk, flexibility, and other concepts from Black-Scholes
option pricing theory and the multiplicative binomial
process. Options pricing theory provides an objective
method for valuing flexibility in making future
investment decisions based on new information becoming
available; such flexibility may have great value in certain
risky ventures. This flexibility in the future may or may
not exist without additional investment. The development
of investment strategies to create flexibility must include
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