Accounting for Different Uncertainties: Implications for Climate Investments?
Accounting for Different Uncertainties: Implications for Climate Investments? / Svenja Hector. FEEM, November 2013, 26 p. (nota di lavoro ; 2013.107)
Author’s abstract :
The paper clarifies the link between changes in risk aversion and the effect on the consumption discount rate. In a general framework that can cope with various forms of uncertainty, it is shown that the response of the consumption discount rate to a change in risk aversion depends on some fundamental properties of the considered uncertainties. The application of this general result to specific forms of uncertainty extends existing results to more general forms of risk and yields a new result on preference uncertainty.