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Abstract
In this paper we study the optimal forest conservation policy by a hyperbolically discounting society.
Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own
government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational
dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value
attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated
belief about future time-preferences. This results in a bias toward the current generation gratification which
affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.