Investments under strategic competition and uncertainty: A literature review on Real Option Games

Determining the optimal scale, sequence, and timing of investments involving uncertainty, flexibility, and strategic interactions in imperfectly competitive markets is remarkably complex. Real Option Games is a management science subfield that addresses these aspects by merging real options analysis with game theory. This study reviews the extant literature in this branch of economics devoted to model capital-intensive investments under uncertainty and oligopolistic competition. This work updates previous reviews by a decade, systematically examines the literature, and conducts a bibliometric analysis of 212 articles. A detailed taxonomy is proposed to classify the structural and informational characteristics of game-theoretic models, the embedded features of real options, and their pricing methods. This review focuses on the main modeling assumptions, applications and results to identify novel insights, open issues and future research directions, providing a summary of the research efforts to date. This work offers guidance to researchers and practitioners to enhance strategic investment planning in oligopolistic markets.