Differential dynamic decision-making model for multi-stage investment of scenic area

Abstract

Differential has been extensively applied in solving many engineering matters. The development of tourism destination with multiple scenic spots is a long-term systematic project and the existing decision-making methods are actually not suitable for this process. Thus it is necessary to introduce new decision-making method to analyse the investment process of tourism destination project. Specifically, considering the irreversibility and extendibility of destination development, the present paper constructed a differential dynamic decision-making model for the long-term investment project based on the classical model of real option; B-S model, and analysed the key parameters affecting the modified model; the present price of the project (ω) and the volatility (δ). An example analysis and a case from Yinziyan scenic area were further analysed to test the operability of the proposed model. The proposed model contributes to dealing with uncertainties and enhancing the decision quality of investors in the investment of scenic spots. And the application of differential in tourism destination development contributes to the accuracy of decision-making. Therefore, this paper has both theoretical and practical significance.