Therefore, this could be a flexible strategy, allowing mid-stream corrections and customizing to circumstances. The second strategy on the graph, with most of the uncertainty spread over the effectiveness axis, is privatization. This is the one most likely to be lowest cost, but with very uncertain effectiveness based on the degree of political will. The third strategy, which appeared less risky overall, is simply the extension of current policy into the future, i.e. maximizing oil production with privatization of pipelines only. This demonstrates that the lowest risk strategy may not be the best one.
Microeconomic theory is highly developed but weakly predictive, lacking behavioral theory.
It has a few behavioral concepts and is slightly more predictive. Real Option Theory is not predictive. It says you learn from experience, and keep your options open. This represents an alternative to behavioral theory. Portfolio theory says that given lack of a theory and great uncertainty, the simple principle is diversification.