Option Value

Option Value is the value assigned in a cost-benefit analysis to keeping options open because we can't predict whether or not we would like to take them. A simple example of the tradeoff would be taking an umbrella with you on a day that has a 30% chance of rain. More generally, option value is related to the idea of premature optimization. That, all else being equal, we should like to choose actions that minimize constriction of our future options.