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Alternative Types of Ambiguity and their Effects on Climate Change Regulation

Author

Listed:
  • Phoebe Koundouri

    (Dept. of International and European Economic Studies, Athens University of Economics and Business)

  • Nikitas Pittis

    (University of Piraeus, Greece)

  • Panagiotis Samartzis
  • Nikolaos Englezos
  • Andreas Papandreou

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.

Suggested Citation

  • Phoebe Koundouri & Nikitas Pittis & Panagiotis Samartzis & Nikolaos Englezos & Andreas Papandreou, 2017. "Alternative Types of Ambiguity and their Effects on Climate Change Regulation," DEOS Working Papers 1706, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:1706
    as

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    File URL: http://wpa.deos.aueb.gr/docs/Climate.Change.Regulation.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    decision making on climate change; ambiguity; deep uncertainty; deferential ambiguity; preferential ambiguity; tail risks of environmental-policy variables.;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D - Microeconomics

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