Present Bias in Renewable Resources Management Reduces Agent's Welfare

23 Pages Posted: 26 May 2021

See all articles by Marco Persichina

Marco Persichina

Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics; University of Umea - Department of Economics; Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE)

CERE Center for Environmental and Resource Economics

CERE

Date Written: May 21, 2021

Abstract

This paper analyses the effects of myopic and present-biased preferences on the welfare of a naive agent when she is engaged in an intertemporal harvesting activity from a stock of renewable resources. The analysis is conducted by taking into account also the nature of present-biased behaviors as phenomena that is derived from a dual system of discounting and of response to short and long-term stimuli.

In the task of harvesting from a stock of renewable resources, the present biased preferences of a naive agent create a conflict between the long run benefit of the agent and the short run desire.

Thus, this paper demonstrates and argues that in the decision-making, which involves intertemporal choices in renewable resources management, the prevalence of naive behavior, strongly influenced by the emotional-affective system, can lead to a reduction in the overall utility enjoyed by the individual due to the present bias.

Keywords: Present bias, naive agent, intertemporal choice, harvesting, dual system discounting

JEL Classification: D15, D90, Q20

Suggested Citation

Persichina, Marco and Center for Environmental and Resource Economics, CERE, Present Bias in Renewable Resources Management Reduces Agent's Welfare (May 21, 2021). Available at SSRN: https://ssrn.com/abstract=3850675 or http://dx.doi.org/10.2139/ssrn.3850675

Marco Persichina (Contact Author)

Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics ( email )

S-901 83 Umea
Sweden

University of Umea - Department of Economics ( email )

Umeå University
Umea, SE - 90187
Sweden

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE) ( email )

Almas Allé 10
Umeå, 750 07
Sweden

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