Risk and Resource Economics: The State of the Art

Decision-making under uncertainty has always been a fascinating area of study in economics. One of the most difficult aspects of the theory is in its applications to intertemporal allocation problems. In the absence of a complete and perfect set of future markets, there is no simple and unique way of modelling the behaviour of firms and of individuals. The number of possible approaches is bewildering. This chapter is an attempt to survey some of the more fruitful approaches to the problem of economic choice under uncertainty in an intertemporal context, with particular reference to natural-resource economics.