WP1. Developing consistent decision criteria that incorporate behavioral realities
We made substantial progress in extending Cost risk analysis which allows for time-consistent decision making under anticipated future learning and can be expanded to include technology assessments (Roshan et al., 2019; Roshan et al., 2021). Most climate economic scenarios as assembled in IPCC AR5 were generated under CEA, ignoring future learning. We show for the special case of (i) immediate action, (ii) no negative emissions, and (iii) no solar radiation management that CEA-based solutions are good approximations of CRA-based solutions (Held, 2019). We also made progress into the question how individuals attitudes towards uncertainty are affected by new information.
Based on a survey experiment with a general population sample of 1505 participants, Minnich et al. (2022) investigate ambiguity attitudes related to weather (temperature) events which come closest to climate related decision making. The study assesses ambiguity attitudes in two indices which are robust to diverse formulations of ambiguity preference-models. We show how ambiguity attitudes react to new information (i.e. weather forecasts) and to how the information is displayed as well as if the forecasts is surprising or conforming to the initial observed temperature trend.
References:
Held, H. (2019). Cost Risk Analysis – Dynamically Consistent Decision-Making under Climate Targets, Environmental and Resource Economics, 72 (1), 247-261, DOI 10.1007/s10640-018-0288-y.
Minnich, Aljoscha, Hauke Roggenkamp, Andreas Lange (2022): Ambiguity attitudes and Surprises: Evidence from a large population sample (in preparation)
Roshan, E., Khabbazan, M. M., Held, H. (2021). A Scheme for Jointly Trading-off Costs and Risks of Solar Radiation Management and Mitigation under Long-tailed Climate Sensitivity Probability Density Distributions, Environmental Modeling & Assessment 26 (5), 823-836.
Roshan, E., Khabbazan, M. M., Held, H. (2019). Cost-Risk Trade-off of Mitigation and Solar Geoengineering – Considering Regional Disparities under Probabilistic Climate Sensitivity, Environmental and Resource Economics, 72 (1), 263-279, DOI 10.1007/s10640-018-0261-9.