Uncertainties characterizing climate science, the economy and their interrelationships are a compelling argument for considering ambiguity and misspecification in the economics of climate change.  The Intergovernmental Panel on Climate Change's (IPCC) approach to dealing with uncertainty is like risk as defined in decision theory.  Dealing with risk involves providing intervals of parameter estimates along with their central values for parameters that are not known with certainty.  Qualitative assessments mainly of climate change impacts combine evidence, subjective probabilities, and agreement among experts.  Projections of global temperatures are based on scenarios that reflect different assumptions about scientific and socioeconomic characteristics of the future state of the world.

Xepapadeas, Anastasios. "Uncertainty and Climate Change: The IPCC Approach vs Decision Theory". Journal of Behavioral and Experimental Economics. Accessed 2025. https://wwhttps/... (Contributed by Gregory Autin).

Posted on 03/04/25

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