Climate Policy When the Distant Future Matters: Catastrophic Events with Hyperbolic Discounting
| dc.creator | Karp, Larry S. | |
| dc.creator | Tsur, Yacov | |
| dc.date | 2017-04-01T18:15:00Z | |
| dc.date.accessioned | 2026-07-09T02:49:49Z | |
| dc.description | Low probability catastrophic climate change can have a significant influence on policy under hyperbolic discounting. We compare the set of Markov Perfect Equilibria (MPE) to the optimal policy under time-consistent commitment. For some initial levels of risk there are multiple MPE; these may involve either excessive or insufficient stabilization effort. These results imply that even if the free-rider problem amongst contemporaneous decision-makers were solved, there may remain a coordination problem amongst successive generations of decision-makers. A numerical example shows that under plausible conditions society should respond vigorously to the threat of climate change. | |
| dc.identifier | doi:10.22004/ag.econ.7186 | |
| dc.identifier | https://ageconsearch.umn.edu/record/7186/files/wp071037.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/7186 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/520910 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/7186 | |
| dc.title | Climate Policy When the Distant Future Matters: Catastrophic Events with Hyperbolic Discounting | |
| dc.type | Text |