[séminaire CREM FSE] “Ambiguity Attitudes in Climate Context and Willingness to Pay to Reduce CO2 Emissions” Ilke AYDOGAN - Faculté Des Sciences Economiques

Abstract:
Uncertainties surrounding climate change often involve unknown (or in principle unknowable) probabilities of future climate conditions and its socio-economic consequences. Therefore, most climate decisions are made under ambiguity (or “deep uncertainty”), which is commonly shown to be distinct from situations of risk (i.e., known probabilities) in the literature. Whereas ambiguity attitudes (i.e., differences between risk and ambiguity) have been well-established in behavioral economics, discussions of the role of ambiguity in environmental economics have so far been mainly confined to theoretical applications to normative climate policy analysis. In particular, a descriptive investigation of ambiguity attitudes in climate change context, despite its potential relevance for understanding climate policy acceptance, has been virtually absent in the literature. The current study fills this gap and explores the empirical link between ambiguity attitudes and willingness to pay (WTP) for climate mitigation. Our experiment shows that individuals’ preferences under ambiguity is an important covariate of their WTP to reduce CO2 emissions.