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arXiv · 2507.15438

Active Product Development

Santiago Oliveros
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Abstract

We introduce a dynamic model in which a developer incrementally improves a product of uncertain quality over time, with the quality evolving as a controlled Brownian motion. At each moment in time, the developer can continue exploring by paying a flow cost, restart from a previously attained quality level by paying a fixed cost, or terminate the process by either freely abandoning the project or by incurring a cost to launch the highest quality observed so far. The optimal strategy is characterized by a free boundary of an impulse-controlled Brownian motion.

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Santiago Oliveros. 2025-07-21. Active Product Development. https://arxiv.org/abs/2507.15438

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