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Control variates are often used to reduce variability in Monte Carlo estimates and their effectiveness is traditionally measured by the so-called speed-up factor. The main objective of this paper is to demonstrate that a control variate can also be applied to reduce the bias stemming from the discretization of the state variable dynamics. This is particularly valuable when stochastic interest rate models are discretized, since bias reduction through more grid points is computationally expensive.Monte Carlo simulation, control variate, discretization bias, variance reduction, compound options, stochastic interest rates,

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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.