Adoption of abatement technology in an uncertain world: An experiment

Teng Ma

Journal of Economic Behavior & Organization, 2024, vol. 225, issue C, 51-87

Abstract: This paper embeds the decision to invest in abatement technology in a social dilemma game while endogenizing the probability of environmental hazard. Both the model and a laboratory experiment show that risk-averse agents invest less in abatement, particularly when the probability of environmental damage is high. Specifically, an inverted-U relationship between investment in abatement technology and risk aversion is observed. I also find that the Bayesian Value of a Statistical Life (BVSL) correlates positively with saving and negatively with both production and abatement technology. The results suggest that uncertain damage from nature negatively affects abatement technology adoption but promotes group efficiency at low damage probabilities, while it is counterproductive for group efficiency when the probability is high. While uncertainty can bring a short-term increase in cooperation, it fails to curb the tendency towards overuse in the long run.

Keywords: Abatement technology; Uncertainty; Risk aversion; Bayesian value of a statistical life; Cooperation (search for similar items in EconPapers)
JEL-codes: C90 D81 H41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268124002282
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:225:y:2024:i:c:p:51-87

DOI: 10.1016/j.jebo.2024.06.010

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().