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Climate policy: How to deal with ambiguity?

Author

Listed:
  • Johanna Etner

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Meglena Jeleva

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Natacha Raffin

    (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

We study the impact of ambiguity and ambiguity attitudes on optimal adaptation and mitigation decisions when the future environmental quality is ambiguous and the decision maker’s (DM) preferences are represented by the $$\alpha $$ α -Maxmin Expected Utility model. We show that ambiguity aversion plays a significant role in designing an optimal climate policy that is different from risk aversion. We also focus on the induced effects of changes in ambiguity, captured by the arrival of additional information. We state that a change in the informational structure may trigger more efforts of both mitigation and adaptation depending on both the DM’s attitude toward ambiguity and her environmental preferences.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Johanna Etner & Meglena Jeleva & Natacha Raffin, 2019. "Climate policy: How to deal with ambiguity?," Working Papers hal-02340134, HAL.
    • Handle: RePEc:hal:wpaper:hal-02340134
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    Citations

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    Cited by:

    1. Eddai, Nahed & Guerdjikova, Ani, 2023. "To mitigate or to adapt: How to deal with optimism, pessimism and strategic ambiguity?," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 1-30.
    2. Li, Zheng & Hensher, David A. & Zeng, Jingjing, 2022. "Travel choice behaviour under uncertainty in real-market settings: A source-dependent utility approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 168(C).
    3. Nahed Eddai & Ani Guerdjikova, 2023. "To mitigate or to adapt: how to deal with optimism, pessimism and strategic ambiguity?," Post-Print hal-03590990, HAL.
    4. repec:hal:wpaper:hal-03590990 is not listed on IDEAS
    5. Suzi Kerr & Steffen Lippert & Edmund Y. Lou, 2025. "Transfers in climate action teams," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 80(2), pages 595-618, September.
    6. Yingjie Niu & Zhentao Zou, 2024. "Robust Abatement Policy with Uncertainty About Environmental Disasters," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(4), pages 933-965, April.
    7. Marielle Brunette & Stéphane Couture & Patrice Loisel, 2025. "Decisions under ambiguities and value of information: An experiment on forest management in the context of climate change," Working Papers of BETA 2025-41, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    8. Falco, Chiara & Rotondi, Valentina & Kong, Douch & Spelta, Valeria, 2021. "Investment, insurance and weather shocks: Evidence from Cambodia," Ecological Economics, Elsevier, vol. 188(C).

    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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