composition of the optimal mix as both persuade the risk-averse social planner to invest more in mitigation. Overall, we identify …

assessment model (IAM) with long-run risk, adapting methods from the asset pricing literature to deal with endogenous climate … risk. The model solves in closed-form for general degrees of risk aversion, stochastic climate feedbacks, and a stochastic …

world. In this sense, newly arriving information is optimally processed. This is in stark contrast to treaties based on …

intergenerational inequality aversion and for risk aversion. If growth increases (reduces) intra-generational inequality, the SDR is …

optimal policy balance in the context of catastrophic climate risk. The analysis uses the WITCH integrated assessment model … with a module that models the endogenous risk of experiencing an economic catastrophe if temperature increases above a … certain threshold. We find that the risk of a catastrophic outcome would encourage countries to reduce emissions even in the …

derive a general analytic formula for the "risk premium" governing the resulting climate policy. The formula generalizes … making under uncertainty. It clarifies the distinct roles of risk aversion, prudence, characteristics of the damage … formulation, and future policy response. We show that an optimal response to uncertainty substantially reduces the risk premium. …

uncertainty, due to the separation of aversion to intergenerational inequality and aversion to risk, this analysis elucidates the … risk aversion when there is interaction between damage and equilibrium climate sensitivity uncertainty, than when only one …