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The precautionary principle in environmental policy and the theory of choice under uncertainty

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  • John Quiggin

    () (Risk & Sustainable Management Group, School of Economics, University of Queensland)

Abstract

The 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.

Suggested Citation

  • John Quiggin, 2005. "The precautionary principle in environmental policy and the theory of choice under uncertainty," Murray-Darling Program Working Papers WPM05_3, Risk and Sustainable Management Group, University of Queensland.
  • Handle: RePEc:rsm:murray:m05_3
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    File URL: http://www.uq.edu.au/rsmg/WP/WPM05_3.pdf
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    References listed on IDEAS

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    1. Itzhak Gilboa & David Schmeidler, 1995. "Case-Based Decision Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 605-639.
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    Citations

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    Cited by:

    1. Alexander Harin, 2005. "Gains and losses: the same or different choices? A “non-ideal” economics approach," International Finance 0509002, EconWPA.
    2. Harin, Alexander, 2006. "Scientific Revolution? A Farewell to EconWPA. MPRA is welcome," MPRA Paper 71, University Library of Munich, Germany.
    3. Clarke Harry, 2008. "Classical decision rules and adaptation to climate change ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(4), pages 487-504, December.
    4. Nabil I. Al-Najjar, 2015. "A Bayesian Framework for the Precautionary Principle," The Journal of Legal Studies, University of Chicago Press, vol. 44(S2), pages 337-365.
    5. Peterson, Deborah C., 2006. "Precaution: principles and practice in Australian environmental and natural resource management," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 137764, Australian Agricultural and Resource Economics Society.
    6. Peterson, Deborah C., 2006. "Precaution: principles and practice in Australian environmental and natural resource management," Conference/Workshop Proceedings 31906, Productivity Commission.
    7. Alexander Harin, 2005. "Scientific Revolution. A Farewell to EconWPA," Method and Hist of Econ Thought 0512003, EconWPA.
    8. Alexander Harin, 2005. "A Rational Irrational Man," Public Economics 0511005, University Library of Munich, Germany.
    9. Alexander Harin, 2005. "Gains and losses. The same or different choices?," International Finance 0508004, EconWPA.
    10. Alexander Harin, 2006. "A Rational Irrational Man?," Microeconomics harin_alexander.34115-060, Socionet.
    11. Harin, Alexander, 2007. "Principle of uncertain future and utility," MPRA Paper 1959, University Library of Munich, Germany.

    More about this item

    Keywords

    precautionary principle; generalized expected utility theory;

    JEL classification:

    • 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

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