a real option approach
Di Corato, Luca
(2016).
Rural land development under hyperbolic discounting.
Uppsala:
(NL, NJ) > Dept. of Economics, Sveriges lantbruksuniversitet.
Working paper series / Swedish University of Agricultural Sciences, Department of Economics
; 2016:08
[Report]
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Abstract
This article presents a simple model of land development under uncertainty and hyperbolic discounting. Land kept in rural use pays an uncertain rent, while net returns from land development are known and constant. The landowner is viewed here as a sequence of infinite autonomous selves with time-inconsistent preferences. We solve the underlying noncooperative intra-personal stopping time game under both naïve and sophisticated beliefs about the landowner's time-inconsistency and show that i) land development is accelerated due to his present-biased time preferences and ii) a higher acceleration is associated with sophistication.
| Authors/Creators: | Di Corato, Luca |
|---|---|
| Title: | Rural land development under hyperbolic discounting |
| Subtitle: | a real option approach |
| Series/Journal: | Working paper series / Swedish University of Agricultural Sciences, Department of Economics (1401-4068) |
| Year of publishing : | 29 August 2016 |
| Depositing date: | 29 August 2016 |
| Number: | 2016:08 |
| Number of Pages: | 18 |
| Place of Publication: | Uppsala |
| Publisher: | Department of Economics, Swedish University of Agricultural Sciences |
| ISSN: | 1401-4068 |
| Language: | English |
| Publication Type: | Report |
| Full Text Status: | Public |
| Agris subject categories.: | E Economics, development, and rural sociology > E11 Land economics and policies |
| Subjects: | (A) Swedish standard research categories 2011 > 5 Social Sciences > 502 Economics and Business > Economics |
| Agrovoc terms: | agricultural economics, decision making, uncertainty, models |
| Keywords: | Land Development, Stochastic Hyperbolic Discounting, Timing Game, Real Options |
| URN:NBN: | urn:nbn:se:slu:epsilon-e-3661 |
| Permanent URL: | http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-e-3661 |
| ID Code: | 13609 |
| Faculty: | NJ - Fakulteten för naturresurser och jordbruksvetenskap |
| Department: | (NL, NJ) > Dept. of Economics |
| External funders: | FORMAS |
| Deposited By: | DR LUCA DI CORATO |
| Deposited On: | 15 Sep 2016 10:45 |
| Metadata Last Modified: | 15 Sep 2016 10:45 |
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