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, we show that the features of agile development that subdivide the development unit improve investment expectations. This is a mechanism that reduces investment uncertainty in software development. This can be explained by the Abandon Option in Real Option Theory.