The precautionary principle in environmental policy and the theory of choice under uncertainty
AbstractThe precautionary principle, presented as a guide to environmental policy decisions in the presence of uncertainty, has been the subject of vigorous debate. However, the has generally not been discussed in relation to formal theories of choice under uncertainty developed as generalizations of the expected utility model. In this paper, it is argued that a formal basis for the precautionary principle may be found in an incompleteness hypothesis regarding formal models of choice under uncertainty. The incompleteness hypothesis states that estimates derived from formal models of choice under uncertainty will generally be over-optimistic and that the errors will be greater, the less well-understood is the problem in question.
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Date of creation: Apr 2005
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precautionary principle; generalized expected utility theory;
Other versions of this item:
- Quiggin, John, 2005. "The Precautionary Principle in Environmental Policy and the Theory of Choice under Uncertainty," Risk and Sustainable Management Group Working Papers 149847, University of Queensland, School of Economics.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-AGR-2005-05-20 (Agricultural Economics)
- NEP-ALL-2005-05-16 (All new papers)
- NEP-DCM-2005-05-22 (Discrete Choice Models)
- NEP-ENV-2005-06-11 (Environmental Economics)
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