Model uncertainty is inherent in the design of optimal environmental policy. We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilize the carbon content of the atmosphere. We study how decision-makers' concerns about robustness alter policy using...

Cooperation is thought to be a necessary condition to solve collective dilemmas such as climate change or the sustainable use of common-pool resources. Yet, it is poorly understood how situations pervaded by thresholds shape the behaviour of people facing collective dilemmas. Here we provide...

Robust decision making implies welfare costs or robustness premia when the approximating model is the true data generating process. To examine the importance of these premia at the aggregate level we employ a simple two-sector dynamic general equilibrium model with human capital and introduce an...