Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/244431 
Year of Publication: 
2008
Series/Report no.: 
Working Paper No. 9/2007
Publisher: 
Örebro University School of Business, Örebro
Abstract: 
Abstract: Public investments are dynamic in nature, and decision making must account for the uncertainty, irreversibility and potential for future learning. In this paper we adapt the theory for investment under uncertainty for a public referendum setting and perform the first empirical test to show that estimates of the value of safety (VSL) from stated preference surveys are highly dependent on the inclusion of the option value. Our results indicate an option value of a major economic magnitude. This implies that previously reported VSL estimates are exaggerated.
Subjects: 
Value of a Statistical Life
Real Options
Contingent Valuation
Road Safety
JEL: 
D61
D80
R41
Document Type: 
Working Paper

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