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Optimists, Pessimists, and the Precautionary Principle

Author

Listed:
  • Meglena Jeleva

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Stéphane Rossignol
Abstract
The precautionary principle has emerged as a leading guide to public decision-making about environmental risks under irreversibility and uncertainty. In this paper, we adopt a two-period model with irreversibility and agents differentiated by their degree of optimism to character-ize the conditions under which the precautionary principle applies. We show in particular that it is more often applied if the decision-maker has an intermediate optimism index, if scientific research is more effective at reducing uncertainty, and if the same decision-maker makes the decisions for both periods. Moreover, we show that socially optimal decisions lead to apply the precautionary principle more often than an elected decision-maker does.

Suggested Citation

  • Meglena Jeleva & Stéphane Rossignol, 2019. "Optimists, Pessimists, and the Precautionary Principle," Post-Print hal-02047321, HAL.
    • Handle: RePEc:hal:journl:hal-02047321
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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