WHY INCREASED UNCERTAINTY MAY LEAD TO MORE RISKY BEHAVIOR

The purpose of this article is to investigate circumstances under which it may be optimal to deliberately harvest a fish stock to extinction applying a stochastic surplus growth model. It is known from the literature that deliberate extinction may result when there is critical depensation or when the discount rate is high compared to the intrinsic growth rate. Here it is shown that deliberate extinction may also be optimal when the degree of stochasticitry is high even with zero discounting. A high degree of stochasticity may have the same effect as critical depensation even though it is not present in the biological model. In other words, high uncertainty, instead of leading to more conservative harvesting as is usually expected, in this model result in more aggressive harvesting and more risky behavior. The main message is therefore always to try to keep the stock well above any critical limit.