Probability discounting of environmental gains: do we multiply or add up?

Jiaxin Chen, Chuqian Chen, Yuqing Wang and Guibing He

Journal of Risk Research, 2019, vol. 22, issue 12, 1479-1489

Abstract: Individuals often discount and transform risky environmental outcomes into psychological certainty equivalences (CEs) during environmental decision-making. Their preference for different alternatives is influenced by the discounting degree. Our first experiment undertook a preliminary inspection of the probability discounting of environmental gains through a matching method; whereas in Experiment 2, the discounting rule of environmental gain was compared with monetary gain by a new line-projective method, which asked participants to project their subjective value evaluation explicitly on a line of specific length. The environmental gain and its mental value-equivalent monetary gain were analogical with respect to discounting degree and process model fitting. The probability discounting of both gains was better described by an additive-utility model than the normative exponential and hyperbolic models, which means that individuals were likely to discount the risky outcome by simply adding the disutility of uncertainty to the gain’s nominal utility, rather than by multiplying the initial value by a discounting factor. It may be of great value in shedding light on the lay public evaluation of risky environmental interventions and boosting pro-environmental policy support.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13669877.2018.1485167 (text/html)
Access to full text is restricted to subscribers.

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:taf:jriskr:v:22:y:2019:i:12:p:1479-1489

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJRR20

DOI: 10.1080/13669877.2018.1485167

Access Statistics for this article

Journal of Risk Research is currently edited by Bryan MacGregor

More articles in Journal of Risk Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().