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Environmental and Resource Economics

, Volume 49, Issue 2, pp 263–304 | Cite as

Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences

  • Elisabeth Gsottbauer
  • Jeroen C. J. M. van den Bergh
Article

Abstract

Established environmental policy theory is based on the assumption of homo economicus. This means that people are seen as fully rational and acting in a self-regarding manner. In line with this, economics emphasizes efficient policy solutions and the associated advantages of price incentives. Behavioral economics offers alternative, more realistic views on individual behavior. In this paper we investigate opportunities to integrate bounded rationality and other-regarding preferences into environmental policy theory to arrive at recommendations for more effective policies. For this purpose, we will address decisions made under risk and uncertainty, intertemporal choice, decision heuristics, other-regarding preferences, heterogeneity, evolutionary selection of behaviors, and the role of happiness. Three aspects of environmental policy are considered in detail, namely sustainable consumption, environmental valuation and policy design. We pay special attention to the role of non-pecuniary, informative instruments and illustrate the implications for climate policy.

Keywords

Climate policy Evolution Monetary valuation Non-pecuniary instruments Pro-environmental behavior Rationality Social norms Sustainable consumption 

JEL Classification

D03 D8 H23 Q54 Q58 

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Copyright information

© Springer Science+Business Media B.V. 2010

Authors and Affiliations

  • Elisabeth Gsottbauer
    • 1
  • Jeroen C. J. M. van den Bergh
    • 2
    • 3
    • 4
    • 5
  1. 1.Institute for Environmental Science and TechnologyUniversitat Autònoma de BarcelonaBellaterra, CerdanyolaSpain
  2. 2.ICREABarcelonaSpain
  3. 3.Department of Economics and Economic History & Institute for Environmental Science and TechnologyUniversitat Autònoma de BarcelonaBellaterra, CerdanyolaSpain
  4. 4.Faculty of Economics and Business Administration and Institute for Environmental StudiesVU University AmsterdamAmsterdamThe Netherlands
  5. 5.NAKE and Tinbergen InstituteAmsterdamThe Netherlands

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