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Why Uncertainty Matters - Discounting under Intertemporal Risk Aversion and Ambiguity
Traeger, Christian - CESifo - 2012
contribution, the paper extends the smooth ambiguity model by providing a threefold disentanglement between, risk aversion …, ambiguity aversion, and the propensity to smooth consumption over time. …
Persistent link: https://www.econbiz.de/10009645646
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Experimentation in Two-Sided Markets
Peitz, Martin; Rady, Sven; Trepper, Piers - CESifo - 2015
We study optimal experimentation by a monopolistic platform in a two-sided market. The platform provider is uncertain about the strength of the externality each side is exerting on the other. Setting participation fees on both sides, it gradually learns about these externalities by observing...
Persistent link: https://www.econbiz.de/10011277185
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Announcing is Bad, Delaying is Worse: Another Pitfall in Well-Intended Climate Policy
Jus, Darko; Meier, Volker - CESifo - 2012
It is frequently observed that the implementation of green policies is delayed compared to the initial announcement. Considering a setting with a representative monopolist extracting a non-renewable resource, we demonstrate that announcing a green policy, but then delaying its implementation, is...
Persistent link: https://www.econbiz.de/10010752787
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Optimal Fiscal Policy
Lukkezen, Jasper; Teulings, Coenraad N. - CESifo - 2013
This paper derives and estimates rules for fiscal policy that prescribe the optimal response to changes in unemployment and debt. We combine the reduced-form model of the economy from a linear VAR with a non-linear welfare function and obtain analytic solutions for optimal policy. The variables...
Persistent link: https://www.econbiz.de/10010659180
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When is Ambiguity-Attitude Constant?
Eichberger, Jürgen; Grant, Simon; Kelsey, David - CESifo - 2012
This paper studies how updating affects ambiguity-attitude. In particular we focus on the generalized Bayesian update … of the Jaffray-Phillipe sub-class of Choquet Expected Utility preferences. We find conditions for ambiguity-attitude to … be the same before and after updating. A necessary and sufficient condition for ambiguity-attitude to be unchanged when …
Persistent link: https://www.econbiz.de/10010539152
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Impatience and Uncertainty: Experimental Decisions Predict Adolescents' Field Behavior
Sutter, Matthias; Kocher, Martin G.; Rützler, Daniela; … - CESifo - 2011
We study risk attitudes, ambiguity attitudes, and time preferences of 661 children and adolescents, aged ten to … mass index, are less likely to save money and show worse conduct at school. Experimental measures for risk and ambiguity …
Persistent link: https://www.econbiz.de/10009364730
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The Value of a Statistical Life under Ambiguity Aversion
Treich, Nicolas - CESifo - 2008
We show that ambiguity aversion increases the value of a statistical life as soon as the marginal utility of wealth is … higher if alive than dead. The intuition is that ambiguity aversion has a similar effect as an increase in the perceived … baseline mortality risk, and thus operates as the “dead anyway” effect. We suggest, however, that ambiguity aversion should …
Persistent link: https://www.econbiz.de/10005406403
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Global Warming and Extreme Events : Rethinking the Timing and Intensity of Environmental Policy
Chen, Yu-Fu - 2010
The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time...
Persistent link: https://www.econbiz.de/10013139799
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On the Underestimation of the Precautionary Effect in Discounting
Gollier, Christian - 2011
Using the extended Ramsey rule, the socially efficient rate is the difference between a wealth effect and a precautionary effect of economic growth. This second effect is increasing in the degree of uncertainty affecting the future. In the literature, it is usually calibrated by estimating the...
Persistent link: https://www.econbiz.de/10013121828
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Coordinating Climate and Trade Policies : Pareto Efficiency and the Role of Border Tax Adjustments
Keen, Michael - 2011
This paper explores the role of trade instruments in globally efficient climate policies, focusing on the central issue of whether border tax adjustment (BTA) is warranted when carbon prices differ internationally. It shows that tariff policy has a role in easing cross-country distributional...
Persistent link: https://www.econbiz.de/10013123211