Decisions under Risk and Uncertainty: Behavioral Economics Insights

This lecture explores decision-making under risk and uncertainty, covering topics such as bounded rationality, prospect theory, and framing. It delves into the concepts of descriptive vs. prescriptive decision theory, rational decision-making, and behavioral economics. The instructor discusses the limitations of expected utility theory, evidence of deviations from rational behavior, and the implications of prospect theory in decision-making. Additionally, the lecture addresses the importance of framing in climate change mitigation strategies, target setting, and the concept of carbon budgets. It also examines the abatement measures for reducing greenhouse gas emissions and the global cost curve for various mitigation strategies.