Working Paper : 1706

Authors Koundouri, P., Pittis, N., Samartzis, P., Englezos, N. and Papandreou, A.
Title Alternative Types of Ambiguity and their Effects on Climate Change Regulation
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.
Creation Date 2017-11-00
Keywords decision making on climate change, ambiguity, deep uncertainty, deferential ambiguity, preferential ambiguity, tail risks of environmental-policy variables.
Classification JEL D8, D80, D81, D83, D
File Climate.Change.Regulation.pdf (508100 bytes)
File-Function First version

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