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High-risk high-reward investments to mitigate climate change

Author

Listed:
  • Talbot M. Andrews

    (Center for Behavioral Political Economy, Stony Brook University)

  • Andrew W. Delton

    (Center for Behavioral Political Economy, Stony Brook University
    Center for Behavioral Political Economy, Stony Brook University)

  • Reuben Kline

    (Center for Behavioral Political Economy, Stony Brook University)

Abstract

Some technologies, such as solar or wind power, create certain but relatively small reductions in greenhouse gas emissions. Others, such as carbon sequestration devices, have larger potential upsides, but a greater possibility of failure. Here we show using economic games that people will invest in high-risk high-reward technologies when more certain options will not be sufficient. Groups of players had to contribute enough to avoid a simulated climate change disaster. Players could defect, make a certain contribution or make a risky contribution with a high potential gain. Across four studies using both laboratory (n = 296 and n = 297) and online (n = 501 and n = 499) samples, we found that more players made riskier contributions when necessary targets could not be met otherwise, regardless of the magnitude of potential losses. These results suggest that individuals are willing to invest in risky technology when it is necessary to mitigate climate change.

Suggested Citation

  • Talbot M. Andrews & Andrew W. Delton & Reuben Kline, 2018. "High-risk high-reward investments to mitigate climate change," Nature Climate Change, Nature, vol. 8(10), pages 890-894, October.
    • Handle: RePEc:nat:natcli:v:8:y:2018:i:10:d:10.1038_s41558-018-0266-y
    DOI: 10.1038/s41558-018-0266-y
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    Cited by:

    1. Hideki Yamashita & Shinsuke Kyoi & Koichiro Mori, 2021. "Does Information about Personal Emissions of Carbon Dioxide Improve Individual Environmental Friendliness? A Survey Experiment," Sustainability, MDPI, vol. 13(4), pages 1-29, February.
    2. Alessandro Del Ponte & Aidas Masiliūnas & Noah Lim, 2023. "Information about historical emissions drives the division of climate change mitigation costs," Nature Communications, Nature, vol. 14(1), pages 1-8, December.
    3. Fózer, Dániel & Volanti, Mirco & Passarini, Fabrizio & Varbanov, Petar Sabev & Klemeš, Jiří Jaromír & Mizsey, Péter, 2020. "Bioenergy with carbon emissions capture and utilisation towards GHG neutrality: Power-to-Gas storage via hydrothermal gasification," Applied Energy, Elsevier, vol. 280(C).
    4. Andrews, Talbot M. & Delton, Andrew W. & Kline, Reuben, 2022. "Anticipating moral hazard undermines climate mitigation in an experimental geoengineering game," Ecological Economics, Elsevier, vol. 196(C).
    5. Manfred Milinski & Jochem Marotzke, 2022. "Economic experiments support Ostrom’s polycentric approach to mitigating climate change," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-9, December.
    6. Mulwa, Chalmers & Visser, Martine & Gitonga, Zachary, 2019. "Weather Uncertainty and Demand for Information in Agricultural Technology Adoption: The Case of Namibia," EfD Discussion Paper 19-25, Environment for Development, University of Gothenburg.

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