Climate Change Risk, and Human Behavior: Theory and Evidence

Sanjit Dhami, Narges Hajimoladarvish and Pavan Mamidi

No 10678, CESifo Working Paper Series from CESifo

Abstract: A group of decision makers simultaneously make contributions towards a green fund that reduces the future probability of a climate catastrophe. We derive the theoretical predictions of the effects on contributions arising from `behavioral parameters' such as loss aversion and present-bias; `structural factors' such as variation in the timing of uncertainty; the `demand for a commitment device'; and `institutional factors' such as comparing voluntary contributions with mandatory tax financed contributions. We then run experiments to stringently test our predictions. Loss aversion and present-bias reduce contributions; there is demand for the commitment technology; and voluntary contributions are higher relative to mandatory tax-financed contributions.

Keywords: climate risk abatement; loss aversion; present-biased preferences; voluntary versus mandatory contribution mechanisms; commitment technology (search for similar items in EconPapers)
JEL-codes: C92 D01 D02 D91 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cbe, nep-env, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10678

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