Optimal conservation policy under imperfect intergenerational altruism

Luca Di Corato ()

Journal of Forest Economics, 2012, vol. 18, issue 3, 194-206

Abstract: In this paper we study the optimal conversion policy set by a society composed of a sequence of non-overlapping imperfectly altruistic generations. We show that society can be equivalently viewed as a sequence of hyperbolic discounting agents. Under uncertainty about future pay-offs we determine, as solution to an intergenerational non-cooperative dynamic game, the optimal timing of irreversible conversion. We show that under both naive and sophisticated beliefs about future time-inconsistency, the option value attached to the conversion decision is eroded and earlier conversion occurs. This determines a drastic bias toward the current generation gratification, which affects the intergenerational allocation of benefits and costs from deforestation.

Keywords: Real options; Intergenerational imperfect altruism; Hyperbolic discounting; Timing game (search for similar items in EconPapers)
JEL-codes: C70 D81 Q23 Q58 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Optimal Conservation Policy under Imperfect Intergenerational Altruism (2011)
Working Paper: Optimal Conservation Policy Under Imperfect Intergenerational Altruism (2011)
Working Paper: Optimal Conservation Policy Under Imperfect Intergenerational Altruism (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:foreco:v:18:y:2012:i:3:p:194-206

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DOI: 10.1016/j.jfe.2012.02.002

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