A Precautionary Tale of Uncertain Tail Fattening
AbstractSuppose that there is a probability density function for how bad things might get, but that the overall rate at which this probability density function slims down to approach zero in the tail is uncertain. The paper shows how a basic precautionary principle of tail fattening could then apply. The worse is the contemplated damage, the more should a decision maker consider the bad tail to be among the relatively fatter-tailed possibilities. A rough numerical example is applied to the uncertain tail distribution of climate sensitivity. Copyright Springer Science+Business Media Dordrecht 2013
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 55 (2013)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100263
Climate change; Fat tail; Uncertainty; Catastrophe;
Other versions of this item:
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Antony Millner & Simon Dietz & Geoffrey Heal, 2010.
"Ambiguity and climate policy,"
Grantham Research Institute on Climate Change and the Environment Working Papers, Grantham Research Institute on Climate Change and the Environment
24, Grantham Research Institute on Climate Change and the Environment.
- Antony Millner & Simon Dietz & Geoffrey Heal, 2010. "Ambiguity and climate policy," LSE Research Online Documents on Economics 37595, London School of Economics and Political Science, LSE Library.
- Antony Millner & Simon Dietz & Geoffrey Heal, 2010. "Ambiguity and Climate Policy," NBER Working Papers 16050, National Bureau of Economic Research, Inc.
- Martin L. Weitzman, 2011. "Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(2), pages 275-292, Summer.
- Claude Henry & Marc Henry, 2002.
"Formalization and applications of the Precautionary Principle,"
- Claude HENRY & Marc HENRY, 2002. "Formalization and Applications of the Precuationary Principle," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002009, UniversitÃ© catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Claude Henry & Marc Henry, 2002. "Formalization and applications of the precautionary principles," Discussion Papers, Columbia University, Department of Economics 0102-22, Columbia University, Department of Economics.
- Weitzman, Martin L., 2009.
"On Modeling and Interpreting the Economics of Catastrophic Climate Change,"
3693423, Harvard University Department of Economics.
- Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
- Johanna Etner & Meglena Jeleva & Jean‐Marc Tallon, 2012. "Decision Theory Under Ambiguity," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 234-270, 04.
- In Chang Hwang & Richard S.J. Tol & Marjan W. Hofkes, 2013. "Active Learning about Climate Change," Working Paper Series 6513, Department of Economics, University of Sussex.
- Max Gillman & Michal Kejak & Michal Pakos, 2014. "Learning about Rare Disasters: Implications for Consumptions and Asset Prices," CEU Working Papers, Department of Economics, Central European University 2014_2, Department of Economics, Central European University.
- Max Gillman & Michal Kejak & Michal Pakos, 2014. "Learning about Disaster Risk: Joint Implications for Consumption and Asset Prices," CERGE-EI Working Papers wp507, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Hwang, In Chang, 2014. "Fat-tailed uncertainty and the learning-effect," MPRA Paper 53671, University Library of Munich, Germany.
- Hans-Jürgen Nantke & Alfred Endres & Frederik Schaff & Till Requate & Susanne Dröge, 2013. "Scheitern der Reform des Emissionshandels: Verliert Europa die Vorreiterrolle in der Klimapolitik?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(12), pages 03-15, 06.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.