Cooperative R&D investment decisions: A fuzzy real option approach

We study the optimal firms' strategies in an R&D oligopoly environment for different types of cooperative agreements under fuzzy uncertainty about the effects of cooperation. We address the problem as an R&D fuzzy bargaining game, in which the firms' fuzzy payoffs are computed using the real exchange option methodology that takes into account the managerial flexibility embedded in the R&D opportunities. The main novelty of our contribution is the parametric description both of the intensity of the collaboration for each dimension involved in the agreement and of its fuzzy impact on the firms' payoffs. Interestingly, we show that the degree of imprecise knowledge has a significant impact on the strategic alliances adopted by firms. (c) 2022 Elsevier B.V. All rights reserved.

Automated summary

We investigate the optimal strategies of firms in an R&D oligopoly setting with different types of cooperative agreements under fuzzy uncertainty. We approach the problem as an R&D fuzzy bargaining game, incorporating firms' fuzzy payoffs through the real exchange option methodology that considers managerial flexibility. The novelty lies in the parametric description of collaboration intensity and its fuzzy impact on firms' payoffs. Notably, the level of imprecise knowledge significantly influences firms' strategic alliances.