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Cassandra's Curse: A Second Tragedy of the Commons

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  • Colo, Philippe

Abstract

This paper studies why scientific forecasts regarding exceptional or rare events generally fail to trigger adequate public response. A major example is climate change: despite years of scientific reporting, public acceptance of economic regulations is still limited. Building on the main causes identified by surveys for these reluctances, this paper offers an explanatory mechanism for this paradox. I consider a game of contribution to a public bad: greenhouse gases emissions. Prior to that, contributors receive expert advice regarding climate damages. Because of climate science's complexity, experts' forecasts are non-verifiable. In addition, I assume that the expert cares only about social welfare. Under mild assumptions, I show that no information transmission can happen at equilibrium when the number of contributors is high or the severity of climate damages is low. Then, contributors ignore scientific reports and act solely upon their prior belief.

Suggested Citation

  • Colo, Philippe, 2021. "Cassandra's Curse: A Second Tragedy of the Commons," MPRA Paper 110878, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110878
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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