Alternative Types of Ambiguity and their Effects on Climate Change Regulation

Koundouri, Phoebe and Pittis, Nikitas and Samartzis, Panagiotis and Englezos, Nikolaos and Papandreou, Andreas (2017): Alternative Types of Ambiguity and their Effects on Climate Change Regulation. Published in:

Abstract

This paper focuses on different types of ambiguity that affect climate change regulation. In particular, we analyze the effect of the interactions among three types of agents, namely, the decision maker (DM), the experts and the society, on the probabilistic properties of green-house gas (GHG) emissions and the formation of environmental policy, under two types of ambiguity: "deferential ambiguity" and "preferential ambiguity". Deferential ambiguity refers to the uncertainty that DM faces concerning to which expert's forecast (scenario) to defer. Preferential ambiguity stems from the potential inability of DM to correctly discern the society's preferences about the desired change of GHG emissions. This paper shows that the existence of deferential and preferential ambiguities have significant effects on GHG emissions regulation.

• Item Type: MPRA Paper
• Language: English
• Keywords: decision making on climate change, ambiguity, deep uncertainty, deferential ambiguity, preferential ambiguity, tail risks of environmental-policy variables.
• Subjects: C - Mathematical and Quantitative Methods > C0 - General; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy; Y - Miscellaneous Categories > Y1 - Data: Tables and Charts; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z10 - General

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