Other-regarding Preferences and Social Norms in the Intergenerational Transfer of Renewable Resources when Agent has Present-Biased Preferences

The paper analyses the effects of present-biased preferences on the transfer of resources to future generations in the framework of renewable resources harvesting. The paper assumes that the current generation has other-regarding motivations for future generations, which are expressed through the adherence to spontaneous other-regarding preferences or social norms. Faced with the problem that the short-sighted behavior imposed by the “dictatorship of the present” can cause a reduction in the well-being of future generations, despite the existence of social preferences, the model presented in this study demonstrates that if the social preferences are also expressed through social norms that prescribe to not reevaluate the harvesting decisions, a mitigation of the effect of present bias on the intergenerational equity can occur. In this paper, the model presented shows the properties that a social norm should have to avoid the intergenerational inequality that can derive from present-biased preferences in the intergenerational renewable resources management. Besides the model defines the necessary and the sufficient conditions so that the implementation of the social norm can neutralize the effect of present-biased preferences guaranteeing the optimal harvesting path defined at the beginning.