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Author makes a good point, but wouldn't the cost of decisions map to the options analogy as the cost of the option, which has to be paid no matter if you exerci
by gangstead 7y ago
Author makes a good point, but wouldn't the cost of decisions map to the options analogy as the cost of the option, which has to be paid no matter if you exercise or not?
I'm no financial wonk but in his example if the $1 stock has a $.1 option and holding the stock has an up/flat/down outcome of +$1/0/-$1 the option scenario goes from +$1/0/0 to +$.9/-$.1/-$.1. If the outcomes are evenly distributed expected value for holding is 0 and for the option goes from $.33 to $.23. It's still positive if the option is cheap enough. Back to the project planning metaphor maybe a road map has a single option cost but weekly cycles are a series of options that eat away at your expected outcome.