Greenhouse gas abatement under ambiguity

Abstract

Observing that energy related climate change is an ambiguous prospect, rather than a risky one, this paper examines the consequences of different degrees of and attitudes towards ambiguity. Ambiguous choices differ from risky choices in that decision makers hold no firm probability distribution as to the consequences of their actions, but recognize that preliminary probability estimates may be revised in the light of new information. This (ex ante) recognition may lead to ambiguous choices and risky choices being evaluated differently. The paper offers an explanation of why the evaluation of abatement programmes can differ among people who are likely to suffer similar climate impacts and might be thought to hold similar probability assessments.