On the option interpretation of rational harvesting planning (Q1570766): Difference between revisions

Determination of the optimal harvesting strategy of a harvester facing a stochastically fluctuating population is outlined. It is assumed, in accordance with traditional economical studies of rational harvesting planning, that the objective of the harvester is to find a harvesting plan minimizing the present expected value of the cumulative yield. Using a combination of stochastic calculus, ordinary nonlinear programming, and the classical theory of diffusion the author shows that if underlying population evolves according to a logistic diffusion subject to a general diffusion coefficient, then there is a single threshold density at which harvesting should be initiated in a single fashion. Finally, a real option interpretation of rational harvesting planning is presented.