Environmental and Resource Management under Myopia

Myopia is important in environmental and resource management problems because they often involve intertemporal decisions over a long time horizon. We present a parsimonious extension of standard dynamic programming equation in a continuous time and continuous state setting, which enables rich descri...

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Bibliographic Details
Main Author: FUJII, Tomoki
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2006
Subjects:
Online Access:https://ink.library.smu.edu.sg/soe_research/943
https://ink.library.smu.edu.sg/context/soe_research/article/1942/viewcontent/hotelling_ncd.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:Myopia is important in environmental and resource management problems because they often involve intertemporal decisions over a long time horizon. We present a parsimonious extension of standard dynamic programming equation in a continuous time and continuous state setting, which enables rich description of myopic behavior. In our model, the process of planning future controls and choosing current control are clearly distinguished. We Illustrate the behavior of various types of myopic agents with a simple example of non-renewable resource extraction, and discuss the policy relevance of the expiry of extraction permits to resource management under Myopia.