Oxford Review of Economic Policy volume 24, issue 2, P280-297 2008 DOI: 10.1093/oxrep/grn012 View full text
K. A. Brekke, O. Johansson-Stenman

Abstract: AbstractThis paper attempts to bring some central insights from behavioural economics into the economics of climate change. In particular, it discusses (i) implications of prospect theory, the equity premium puzzle and time inconsistent preferences in the choice of discount rate used in climate change cost assessments, and (ii) the implications of various kinds of social preferences for the outcome of climate negotiations. Several reasons are presented for why it appears advisable to choose a substantially lo…

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