Analysis of fish harvesting decisions under parametric and structural uncertainty
Canada has had a long involvement with the fishing industry. Despite this experience, however, fishery management is still full of uncertainty. The fish, living fully in an aquatic environment, cannot be observed ' in situ'. Also, humans are involved. Traditionally, economists have used a bi-partite classification of uncertainty---splitting the possibilities into risk and uncertainty. Recently, Langlois (1984, 1994) has clarified this distinction and relabeled the categories as parametric uncertainty and structural uncertainty. This thesis identifies the characteristics which help to identify a particular situation as involving parametric or structural uncertainty. It then evaluates four models of choice---Expected Utility Theory, Cumulative Prospect Theory, Real Options Theory and Shackle's Theory of Investment Decisions in the context of the two types of uncertainty. This evaluation is done through two lenses. The first evaluation is methodological, comparing the four models with the logical requirements of logical positivism, Austrian a priorism, scientific realism and instrumentalism. The second evaluation compares the first and last of the decision models in a simulated fishery management situation based on the lake whitefish fishery of Lake Huron in Ontario. The evaluation confirms that the type of uncertainty encountered makes a clear analytical difference and that the models predict different outcomes under each type of uncertainty.