Uncertainty Reduction Mechanism of Agile Development in Internet Services

Abstract

In today's expanding digital economy, agile development holds promise in that it is suitable for quick responses to change and for situations of uncertainty, such as not knowing what the right answer is. The purpose of this paper is to clarify the mechanism by which the characteristics of agile development produce these advantages. Specifically, the authors argue that the feature of subdividing development units in agile development improves investment expectations. We also discussed that this segmentation is a mechanism that reduces investment uncertainty in software development and explained by applying the abandon option of the real option theory.