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Accounting for Different Uncertainties: Implications for Climate Investments?

  • Svenja Hector

    (ETH Zurich Department of Management, Technology and Economics)

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    The paper clarifies the link between changes in risk aversion and the effect on the consumption discount rate. In a general framework that can cope with various forms of uncertainty, it is shown that the response of the consumption discount rate to a change in risk aversion depends on some fundamental properties of the considered uncertainties. The application of this general result to specific forms of uncertainty extends existing results to more general forms of risk and yields a new result on preference uncertainty.

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    File URL: http://www.feem.it/userfiles/attach/2014181126454NDL2013-107.pdf
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    Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2013.107.

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    Date of creation: Dec 2013
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    Handle: RePEc:fem:femwpa:2013.107
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    15. repec:hal:journl:hal-00267891 is not listed on IDEAS
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