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Bounded awareness, heuristics and the Precautionary Principle

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  • Grant, Simon
  • Quiggin, John

Abstract

The Precautionary Principle has been proposed as a basis for making decisions about environmental issues but remains controversial. Using a model of inductively justified propositions about awareness, this paper shows how the Precautionary Principle may be interpreted as a heuristic guide for boundedly rational decision-makers faced with the possibility of unfavorable surprises.

Suggested Citation

  • Grant, Simon & Quiggin, John, 2013. "Bounded awareness, heuristics and the Precautionary Principle," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 17-31.
  • Handle: RePEc:eee:jeborg:v:93:y:2013:i:c:p:17-31
    DOI: 10.1016/j.jebo.2013.07.007
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    References listed on IDEAS

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    1. Suren Basov, 2005. "Bounded rationality: static versus dynamic approaches," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 871-885, June.
    2. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2013. "Dynamic unawareness and rationalizable behavior," Games and Economic Behavior, Elsevier, vol. 81(C), pages 50-68.
    3. Edi Karni & Marie-Louise Vier?, 2013. ""Reverse Bayesianism": A Choice-Based Theory of Growing Awareness," American Economic Review, American Economic Association, vol. 103(7), pages 2790-2810, December.
    4. Simon Grant & John Quiggin, 2013. "Inductive reasoning about unawareness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 717-755, November.
    5. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
    6. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2006. "Interactive unawareness," Journal of Economic Theory, Elsevier, vol. 130(1), pages 78-94, September.
    7. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, November.
    8. Suren Basov & Liam Blanckenberg & Lata Gangadharan, 2007. "Behavioural Anomalies, Bounded Rationality and Simple Heuristics," Department of Economics - Working Papers Series 1012, The University of Melbourne.
    9. Gollier, Christian & Jullien, Bruno & Treich, Nicolas, 2000. "Scientific progress and irreversibility: an economic interpretation of the 'Precautionary Principle'," Journal of Public Economics, Elsevier, vol. 75(2), pages 229-253, February.
    10. Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
    11. Halpern, Joseph Y. & Rêgo, Leandro C., 2009. "Reasoning about knowledge of unawareness," Games and Economic Behavior, Elsevier, vol. 67(2), pages 503-525, November.
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    Citations

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    Cited by:

    1. Simon Grant & John Quiggin, 2015. "A preference model for choice subject to surprise," Theory and Decision, Springer, vol. 79(2), pages 167-180, September.
    2. Li, Sanxi & Peitz, Martin & Zhao, Xiaojian, 2016. "Information disclosure and consumer awareness," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 209-230.
    3. Simon Grant & John Quiggin, 2013. "Inductive reasoning about unawareness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 717-755, November.
    4. Quiggin, John, 2013. "Carbon pricing and the precautionary principle," Risk and Sustainable Management Group Working Papers 152098, University of Queensland, School of Economics.
    5. Alon, Shiri, 2015. "Worst-case expected utility," Journal of Mathematical Economics, Elsevier, vol. 60(C), pages 43-48.
    6. repec:wsi:wepxxx:v:03:y:2017:i:03:n:s2382624x16500429 is not listed on IDEAS

    More about this item

    Keywords

    Precautionary Principle; Unawareness; Bounded rationality; Induction;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other

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