Open AccessADAPTIVE MANAGEMENT OF HARVEST RATES IN THE PRESENCE OF A RISK AVERSE UTILITY FUNCTION
Author(s) -
Walters Carl,
Ludwig Don
Publication year - 1987
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1987.tb00020.x
Subject(s) - stock (firearms) , logarithm , econometrics , risk aversion (psychology) , simple (philosophy) , economics , function (biology) , mathematical optimization , order (exchange) , certainty , computer science , mathematics , expected utility hypothesis , mathematical economics , biology , finance , evolutionary biology , mechanical engineering , mathematical analysis , philosophy , geometry , epistemology , engineering
Previous research on adaptive harvest strategies has suggested that it should rarely be optimal to introduce deliberate, probing variations in harvest rates in order to reduce uncertainty about production parameters, when there is strong aversion to the risk of low catches. Here we show that this suggestion is incorrect for cases where the stock dynamics can be approximated by a simple power model and the objective is to maximize the sum over time of discounted logarithms of catches. In such cases, the objective function has a simple form that permits easy comparison between passively adaptive (certainty equivalent or cautious) versus actively adaptive policies involving probing variation in harvest rates. Probing is favored when there is high uncertainty about the power parameter that represents density dependence in the stock dynamics.