Humans are notoriously bad at understanding probabilities, exhibiting a host of biases and distortions that are context dependent. This has serious consequences on how we assess risks and make decisions. Several theories have been developed to replace the normative rational expectation theory at...

Real option theory has for some decades been used in forest economics to analyse decision problems which involve irreversible and stochastic decisions. One such decision is when to harvest a stand and with what species to regenerate. The latter decision can be postponed for some time, making a...