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Present Bias in Renewable Resources Management Reduces Agent’s Welfare

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  • Persichina, Marco

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.

Suggested Citation

  • Persichina, Marco, 2019. "Present Bias in Renewable Resources Management Reduces Agent’s Welfare," MPRA Paper 97986, University Library of Munich, Germany, revised 10 Dec 2019.
  • Handle: RePEc:pra:mprapa:97986
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    Keywords

    Present bias; naive agent; intertemporal choice; harvesting; dual system discounting; agent’s welfare; instant utility.;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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