The paper develops an axiomatic framework for rational decision making. The von Neumann-Morgenstern axioms give rise to a richer risk attitude than that captured in the standard discounted expected utility model. I derive three models that permit a more comprehensive risk evaluation. These...

Uncertainty has an almost negligible impact on project value in the economic standard model. I show that a comprehensive evaluation of uncertainty and uncertainty attitude changes this picture fundamentally. The analysis relies on the discount rate, which is the crucial determinant in balancing...

The paper derives the optimal carbon tax in closed-form from an integrated assessment of climate change. The formula shows how carbon, temperature, and economic dynamics quantify the optimal mitigation effort. The model’s descriptive power is comparable to numeric models used in policy...

Ein vom ifo Institut entwickeltes Konzept zur CO2-Bepreisung mit dem Titel »Flexcap« verbindet die Vorteile von CO₂-Steuer und Emissionshandelssystem und stellt eine effizientere Lösung als die Reinform beider Instrumente dar. Ein reines Emissionshandelssystem wälzt alle Unsicherheit in...

The present work is dedicated to theoretical aspects of long-term evaluation with a focus on time and uncertainty structure. Motivated along the lines of global warming, the analysis renders contributions to the fields of environmental economics, decision theory, the economics of sustainability...