Operations, Information and Decisions Papers

Document Type

Journal Article

Date of this Version

9-2014

Publication Source

Journal of Consumer Policy

Volume

37

Issue

3

Start Page

397

Last Page

411

DOI

10.1007/s10603-013-9251-z

Abstract

Utilizing theory and empirical insights from psychology and behavioural economics, this paper examines individuals’ cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits, and behavioural biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures.

Keywords

Climate change, decision processes, behavioural economics, energy efficiency, mitigation and adaptation measures, choice architecture

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Date Posted: 27 November 2017

This document has been peer reviewed.