Precautionary principle as a rule of choice with optimism on windfall gains and pessimism on catastrophic losses
Marcello Basili (),
Alain Chateauneuf () and
Ecological Economics, 2008, vol. 67, issue 3, 485-491
The paper investigates a decision-making process involving both risk and ambiguity. Differently from existing papers [Basili, M., Chateauneuf, A., Fontini, F., 2005. Choices under ambiguity with familiar and unfamiliar outcomes, Theory and Decision 58, 195-207; Chichilnisky, G., 2000. Axiomatic approach to choice under uncertainty with catastrophic risks. Resources and Energy Economics 22, 221-231; Chichilnisky, G., 2002. In: El-Shaarawi, A.,H., Piegorsch, W.W. (Eds.), Catastropic Risks. Encyclopedia of Environmetrics, vol. 1. John Wiley & Sons, Ltd, Chichester, UK, pp. 274-279], we assume that, in a Choquet Expected Utility framework, the decision-maker is pessimistic with respect to unfamiliar (catastrophic) losses, optimistic with respect to unfamiliar (windfall) gains and ambiguity-neutral with respect to the familiar world. A representation of the decision-maker's choice is obtained that mimics the Restricted Bayes-Hurwicz Criterion. In this way a characterization of the Precautionary Principle is introduced for decision-making processes under ambiguity with catastrophic losses and/or windfall gains.
Keywords: Ambiguity; Risk; Choquet; Integral; Restricted; Bayes-Hurwicz; Criterion; Precautionary; Principle (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Precautionary principle as a rule of choice with optimism on windfall gains and pessimism on catatrophic losses (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:67:y:2008:i:3:p:485-491
Access Statistics for this article
Ecological Economics is currently edited by C. J. Cleveland
More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().