Loading...
Please wait, while we are loading the content...
Similar Documents
Uncertainty and Natural Resources Prudence facing Doomsday ∗
| Content Provider | Semantic Scholar |
|---|---|
| Author | Emmerling, Johannes Mattei, Fondazione Eni Enrico |
| Copyright Year | 2015 |
| Abstract | This paper studies the optimal extraction of a non-renewable resource under uncertainty using a discrete-time approach in the spirit of the literature on precautionary savings. We nd that boundedness of the utility function, in particular the assumption about U(0), gives very di erent results in the two settings which are often considered as equivalent. For a bounded utility function, we show that in a standard two-period setting, prudence is no longer su cient to ensure a more conservationist extraction policy than under certainty. If on the other hand we increase the number of periods to in nity, we nd that prudence is not anymore not anymore necessary to induce a more conservationist extraction policy and risk aversion is su cient. These results highlight the importance of the speci cation of the utility function and its behavior at the point of origin. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.econstor.eu/bitstream/10419/113941/1/NDL2015-049.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | Arabic numeral 0 Cations Depletion region Diabetes Insipidus Doomsday rule Ectomesenchymal Chondromyxoid Tumor Expected utility hypothesis Petri net Risk aversion Utility |
| Content Type | Text |
| Resource Type | Article |
