Behavioral Economics Seminar: Climate change adaptation decisions when facing extreme events

The Behavioral Economics group at Department of Food and Resource Economics (IFRO) invite to open seminars with a range of subjects within Behavioral Economics.

Bring your own lunch, and we provide knowledge and network.

Catharina Wolff von Bülow, PhD fellow at Technical University of Denmark (DTU), will present a project design titled Climate change adaptation decisions when facing extreme events.

Abstract

I want to experimentally explore the implications of high-stake, low-probability events on decisions to adapt to climate change. The baseline of the study is a standard risk experiment presented in a climate change context. The subjects are informed of the risk level they are confronted with in any given period. They are also informed that in case of no extreme weather event, they receive a large profit, and in case of an extreme weather event they receive a small profit. If they choose to invest in adaptation they receive a medium profit, regardless of an extreme weather event occurring or not. This is used to consider divergence of adaptation choices conditional on ex-ante extreme weather exposure. This can be achieved by conducting the experiment in two different laboratories, one located in a hazard prone area and one in an unhazardous area, or presenting a group of subjects to a video showing a disaster, etc. This should be extended by treatments that enable the subjects to form groups in order to reach a lower adaptation cost, comparable to klimakvarter or some other community/platform that facilitates collaboration in adaptation. In one treatment all group members face the same risk and in another different risks, i.e. 1, 5 and 10. Such an experiment can potentially provide results that back the hypothesis that risk exposure, and lack thereof, skews risk perception, that collaboration decreases this effect, and that inequality aversion may reinforce this result.

For further information, contact:
Catrine Jacobsen, cj@ifro.ku.dk