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Behavioral economics for environmental policy

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  • Venkatachalam, L.
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    Abstract

    The predictions of widely prescribed global and country level environmental policies at present are based mainly on mainstream economic models, which treat individual actors to be 'unboundedly rational' in their decision making. In recent years, however, behavioral and experimental economists have found that the individual actors in many circumstances act within a 'bounded rationality' framework, suggesting that predictions based on the 'unbounded rationality' models would be less valid. While some of mainstream economists have already started adopting the bounded rationality-based models in their academic discourse, many environmental economists seem to be reluctant to use these alternative models of rationality in their research and policy prescriptions. This paper highlights the implications of using bounded rationality models in environmental research in general and policymaking in particular.

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    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 67 (2008)
    Issue (Month): 4 (November)
    Pages: 640-645

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    Handle: RePEc:eee:ecolec:v:67:y:2008:i:4:p:640-645

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    Web page: http://www.elsevier.com/locate/ecolecon

    Related research

    Keywords: Bounded rationality Behavioral anomalies Endowment effect Hyperbolic discounting and Environmental policy;

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    Cited by:
    1. Mzoughi, Naoufel, 2011. "Farmers adoption of integrated crop protection and organic farming: Do moral and social concerns matter?," Ecological Economics, Elsevier, vol. 70(8), pages 1536-1545, June.
    2. Sophie Clot & Charlotte Stanton, 2014. "Present Bias in Payments for Ecosystem Services: Insights from a Behavioural Experiment in Uganda," Working Papers 14-03, LAMETA, Universtiy of Montpellier, revised Jan 2014.
    3. Kawata, Yukichika, 2011. "Decision Making under Ecological Regime Shift: An Experimental Economic Approach," MPRA Paper 30016, University Library of Munich, Germany.
    4. Juan Camilo C�rdenas, 2009. "Experiments in Environment and Development," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 157-182, 09.
    5. Grüner, Sven & Fietz, Anica, 2013. "Chancen, Grenzen und Barrieren staatlicher Regulierungspolitik - Eine verhaltensökonomische Betrachtung unter Berücksichtigung des individuellen landwirtschaftlichen Unternehmerverhaltens," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156109, German Association of Agricultural Economists (GEWISOLA).
    6. Achtnicht, Martin, 2011. "Do environmental benefits matter? Evidence from a choice experiment among house owners in Germany," Ecological Economics, Elsevier, vol. 70(11), pages 2191-2200, September.
    7. Angela Münch, 2010. "Agri-Environmental Schemes and Grassland Biodiversity: Another Side of the Coin," Jena Economic Research Papers 2010-026, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    8. Welsch, Heinz, 2009. "Implications of happiness research for environmental economics," Ecological Economics, Elsevier, vol. 68(11), pages 2735-2742, September.
    9. Nathalie Lazaric & Kevin Maréchal, 2010. "Overcoming inertia: insights from evolutionary economics into improved energy and climate policy," Post-Print hal-00452205, HAL.
    10. Elisabeth Gsottbauer & Jeroen Bergh, 2011. "Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(2), pages 263-304, June.
    11. Osberghaus, Daniel, 2013. "Prospect theory, mitigation and adaptation to climate change," ZEW Discussion Papers 13-091, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Beretti, Antoine & Figuières, Charles & Grolleau, Gilles, 2013. "Behavioral innovations: The missing capital in sustainable development?," Ecological Economics, Elsevier, vol. 89(C), pages 187-195.
    13. Susanne Menzel & Tom L. Green, 2013. "Sovereign Citizens and Constrained Consumers: Why Sustainability Requires Limits on Choice," Environmental Values, White Horse Press, vol. 22(1), pages 59-79, February.
    14. Markus Pasche, 2013. "What Can be Learned from Behavioural Economics for Environmental Policy?," Jena Economic Research Papers 2013-020, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    15. Jason Shogren & Gregory Parkhurst & Prasenjit Banerjee, 2010. "Two Cheers and a Qualm for Behavioral Environmental Economics," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(2), pages 235-247, June.

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