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Rural land development under hyperbolic discounting

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
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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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