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


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.


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

JEL Classification

D03 D8 H23 Q54 Q58 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Abrahamse W, Steg L, Vlek C, Rothengatter T (2005) A review of intervention studies aimed at household energy conservation. J Environ Psychol 25: 273–291CrossRefGoogle Scholar
  2. Ackerman F (1997) Why do we recycle? Markets, values, and public policy. Island Press, Washington DCGoogle Scholar
  3. Alchian A (1950) Uncertainty, evolution and economic theory. J Polit Econ 58: 211–222CrossRefGoogle Scholar
  4. Alpizar F, Carlsson F, Johansson-Stenman O (2008) Anonymity, reciprocity, and conformity: evidence from voluntary contributions to a national park in Costa Rica. J Public Econ 92: 1047–1060CrossRefGoogle Scholar
  5. Alpizar F, Carlsson F, Johansson-Stenman O (2005) How much do we care about absolute versus relative income and consumption?. J Econ Behav Organ 56(3): 405–421CrossRefGoogle Scholar
  6. Alpizar F, Carlsson F, Naranjo M (2009) The effect of risk, ambiguity and coordination on farmers’ adaptation to climate change: a framed field experiment. RFF Discussion Paper EfD DP 09-18Google Scholar
  7. Andreoni J (1989) Giving with impure altruism: applications to charity and ricardian equivalence. J Polit Econ 97(6): 1447–1458CrossRefGoogle Scholar
  8. Andreoni J (1990) Impure altruism and donations to public goods: a theory of warm-glow giving. Econ J 100: 464–477CrossRefGoogle Scholar
  9. Andreoni J, Miller J (2002) Giving according to GARP: an experimental test of the consistency of preferences for altruism. Econometrica 70: 737–753CrossRefGoogle Scholar
  10. Ashraf N, Karlan D, Yin W (2006) Tying odysseus to the mast: evidence from a commitment savings product in the Philippines. Q J Econ 121(2): 673–697CrossRefGoogle Scholar
  11. Arrow KW, Cline KG, Maler M, Munasinghe M, Squitieri R, Stiglitz J (1996) Intertemporal equity, discounting, and economic efficiency. In: Bruce HLJP, Haites E (eds) Climate change 1995: economic and social dimensions of climate change. Cambridge University Press, Cambridge, pp 128–144Google Scholar
  12. Ayres I, Raseman S, Shih A (2009) Evidence from two large field experiments that peer comparison feedback can reduce residential energy usage. NBER Working Paper No. 15386Google Scholar
  13. Barr S, Gilg AW, Ford N (2005) The household energy gap: examining the divide between habitual—and purchase-related conservation behaviours. Energy Policy 33: 1425–1444CrossRefGoogle Scholar
  14. Baumol WJ, Oates WE (1975) The theory of environmental policy. Prentice-Hall, Englewood-CliffsGoogle Scholar
  15. Becker GS, Murphy KM (1988) A theory of rational addiction. J Polit Econ 96: 675–700CrossRefGoogle Scholar
  16. Bénabou R, Tirole J (2003) Intrinsic and extrinsic motivation. Rev Econ Stud 70(3): 489–520CrossRefGoogle Scholar
  17. Bénabou R, Tirole J (2006) Incentives and prosocial behaviour. Am Econ Rev 96(5): 1652–1678CrossRefGoogle Scholar
  18. Berglund C (2006) The assessment of households’ recycling costs: the role of personal motives. Ecol Econ 56: 560–569CrossRefGoogle Scholar
  19. Biel A, Thøgersen J (2007) Activation of social norms in social dilemmas: a review of the evidence and rejection on the implications for environmental behaviour. J Econ Psychol 28: 93–112CrossRefGoogle Scholar
  20. Bohm P (1972) Estimating demand for public goods: an experiment. Eur Econ Rev 3: 111–130CrossRefGoogle Scholar
  21. Botzen W, van den Bergh J (2009) Bounded rationality, climate risks, and insurance: is there a market for natural disasters. Land Econ 85(2): 265–278Google Scholar
  22. Bowles S, Hwang SH (2008) Mechanism design when preferences depend on incentives. J Public Econ 92: 1811–1820CrossRefGoogle Scholar
  23. Bowles S (2008) Policies designed for self-interested citizens may undermine “The Moral Sentiments”: evidence from economic experiments. Science 320: 1605–1609CrossRefGoogle Scholar
  24. Boyd R, Richerson PJ (1993) Rationality, imitation, and tradition. In: Day RH, Chen P (eds) Nonlinear dynamics and evolutionary economics. Oxford University Press, New York, pp 131–149Google Scholar
  25. Braga J, Starmer C (2005) Preference anomalies, preference elicitation and the discovered preference hypothesis. Environ Resour Econ 32(1): 55–89CrossRefGoogle Scholar
  26. Brekke KA, Howarth RB (2000) The social contingency of wants. Land Econ 76: 493–503CrossRefGoogle Scholar
  27. Brekke KA, Howarth R (2002) Status, growth, and the environment: goods as symbols in applied welfare economics. Edward Elgar, CheltenhamGoogle Scholar
  28. Brekke KA, Howarth RB, Nyborg K (2002) Status-seeking and material affluence: evaluating the Hirsch hypothesis. Ecol Econ 45: 29–39CrossRefGoogle Scholar
  29. Brekke KA, Kverndokk S, Nyborg K (2003) An economic model of moral motivation. J Public Econ 87: 1967–1983CrossRefGoogle Scholar
  30. Brekke KA, Kipperberg G, Nyborg K (2007) Reluctant recyclers: social interaction in responsibility ascription. Memorandum 16/2007, Oslo University, Department of EconomicsGoogle Scholar
  31. Brekke KA, Johansson-Stenman O (2008) The behavioural economics of climate change. Oxford Rev Econ Policy 24(2): 280–297CrossRefGoogle Scholar
  32. Brookshire D, Coursey D, Schulze W (1990) Experiments in the solicitation of private and public values: an overview. In: Green L, Kagel J (eds) Advances in behavioral economics II. Ablex Publishing Corporation, New YorkGoogle Scholar
  33. Brown PM, Stewart S (1998) Avoiding severe environmental consequences: evidence on the role of loss avoidance and risk attitudes. J Econ Behav Organ 38: 179–198CrossRefGoogle Scholar
  34. Caballero MC (2004) Academic turns city into a social experiment. Harvard University Gazette, CambridgeGoogle Scholar
  35. Camerer C (1995) Individual decision making. In: Roth A, Kagel J (eds) Handbook of experimental economics. Princeton University Press, PrincetonGoogle Scholar
  36. Camerer C (1999) Behavioral economics: reunifying psychology and economics. Proc Natl Acad Sci 96: 10575–10577CrossRefGoogle Scholar
  37. Camerer C (2004) Prospect theory in the wild: evidence from the field. In: Camerer C, Loewenstein G, Rabin M (eds) Advances in behavioral economics. Princeton University Press, PrincetonGoogle Scholar
  38. Camerer C, Weber M (1992) Recent developments in modelling preferences: uncertainty and ambiguity. J Risk Uncertain 5: 325–370CrossRefGoogle Scholar
  39. Camerer C, Issacharoff S, Loewenstein G, O’Donoghue T, Rabin M (2003) Regulation for conservatives: behavioral economics and the case for “Asymmetric Paternalism”. Univ PA Law Rev 151(3): 1211–1254Google Scholar
  40. Camerer, CF, Loewenstein, G, Rabin, M (eds) (2004) Advances in behavioral economics. Princeton Univesity Press, PrincetonGoogle Scholar
  41. Camerer C, Fehr E (2006) When does ‘economic man’ dominate social behavior?. Science 311: 47–52CrossRefGoogle Scholar
  42. Cardenas JC, Stranlund J, Willis C (2000) Local environmental control and institutional crowding-out. World Dev 28(10): 1719–1733CrossRefGoogle Scholar
  43. Cardenas JC, Ostrom E (2004) What do people bring into the game? Experiments in the field about cooperation in the commons. Agric Syst 82/3: 307–326CrossRefGoogle Scholar
  44. Carpenter J, Myers C (2007) Why volunteer? Evidence on the role of altruism, reputation, and incentives, Middlebury College Working Paper Series 0712, Middlebury College, Department of EconomicsGoogle Scholar
  45. Cardenas JC, Carpenter J (2008) Behavioural development economics: lessons from field labs in the developing world. J Dev Stud 44(3): 311–338CrossRefGoogle Scholar
  46. Carrus G, Passafaro P, Bonnes M (2008) Emotions, habits and rational choices in ecological behaviours: the case of recycling and use of public transportation. J Environ Psychol 28: 51–62CrossRefGoogle Scholar
  47. Charness G, Gneezy U (2008) Incentives to exercise. Econometrica 77(3): 909–931Google Scholar
  48. Cheema A, Soman D (2006) Malleable mental accounting: the effect of flexibility on the justification of attractive spending and consumption decisions. J Consum Psychol 16(1): 33–44CrossRefGoogle Scholar
  49. Cherry T, Crocker T, Shogren J (2003) Rationality spillovers. J Environ Econ Manage 45: 63–84CrossRefGoogle Scholar
  50. Cialdini R (2003) Crafting normative messages to protect the environment. Curr Dir Psychol Sci 12(4): 105–109CrossRefGoogle Scholar
  51. Cialdini R (2007) Descriptive social norms as underappreciated sources of social control. Psychometrika 72(2): 263–268CrossRefGoogle Scholar
  52. Clark CF, Kotchen MJ, Moore MR (2003) Internal and external influences on pro-environmental behavior: participation in a green electricity program. J Environ Psychol 23: 237–246CrossRefGoogle Scholar
  53. Cohen MA, Vandenbergh MP (2008) Consumption, happiness, and climate change. RFF Discussion Paper No. 08-39, WashingtonGoogle Scholar
  54. Conlisk J (1996) Why bounded rationality?. J Econ Lit 34(2): 669–700Google Scholar
  55. Dannenberg A, Sturm B, Vogt C (2007) Do equity preferences matter in climate negotiations? An experimental investigation. ZEW Discussion Paper No. 07-063, MannheimGoogle Scholar
  56. Dasgupta P, Maler KG, Barrett S (1999) Intergenerational equity, social discount rates, and global warming. In: Portney PR, Weyant JP (eds) Discounting and intergenerational equity. Resources for the Future, Washington, DCGoogle Scholar
  57. Deci EL (1972) Intrinsic motivation, extrinsic reinforcement and inequity. J Pers Soc Psychol 22: 113–120CrossRefGoogle Scholar
  58. Defeuilley C (2009) Retail competition in electricity markets. Energy Policy 37: 377–386CrossRefGoogle Scholar
  59. Duesenberry JS (1949) Income, saving, and the theory of consumer behaviour. Harvard University Press, CambridgeGoogle Scholar
  60. Easterlin RA (1974) Does economic growth improve the human lot?. In: David PA, Readers MW (eds) Nations and households in economic growth: essays in honous of moses abramovitz. Academic Press Inc, New YorkGoogle Scholar
  61. Easterlin RA (2001) Income and happiness: towards a unified theory. Econ J 111(473): 465–484CrossRefGoogle Scholar
  62. Ehmke M, Shogren JF (2008) Experimental methods for environment and development economics. Environ Dev Econ 1: 1–38Google Scholar
  63. Ek K, Söderholm P (2008a) Household’s switching behavior between electricity suppliers in Sweden. Utilities Policy 16: 254–261CrossRefGoogle Scholar
  64. Ek K, Söderholm P (2008b) Norms and economic motivation in the Swedish green electricity market. Ecol Econ 68: 169–182CrossRefGoogle Scholar
  65. Ellingsen T, Johannesson M (2008) Anticipated verbal feedback induces altruistic behaviour. Evol Hum Behav 29(2): 100–105CrossRefGoogle Scholar
  66. Ellsberg D (1961) Risk, ambiguity, and the savage axioms. Q J Econ 75: 643–669CrossRefGoogle Scholar
  67. Eriksson L, Garvill J, Nordlund AM (2008) Interrupting habitual car use: the importance of car habit strength and moral motivation for personal car use reduction. Transp Res F(11): 10–23Google Scholar
  68. Faiers A, Cook M, Neame C (2007) Towards a contemporary approach for understanding consumer behaviour in the context of domestic energy use. Energy Policy 35: 4381–4390CrossRefGoogle Scholar
  69. Falk A (2004) Charitable giving as a gift exchange evidence from a field experiment. IZA Discussion Paper No. 1148; ISSN Working Paper No. 168Google Scholar
  70. Falk A, Fischbacher U (2006) A theory of reciprocity. Games Econ Behav 54(2): 293–315CrossRefGoogle Scholar
  71. Fehr E, Schmidt KM (1999) A theory of fairness, competition and cooperation. Q J Econ 817(865): 817–865CrossRefGoogle Scholar
  72. Fehr E, Gächter S (2000) Fairness and retaliation: the economics of reciprocity. J Econ Perspect 14: 159–181CrossRefGoogle Scholar
  73. Fehr E, Falk A (2002) Psychological foundations of incentives. Eur Econ Rev 46(4–5): 687–724CrossRefGoogle Scholar
  74. Fehr E, Gächter S (2004) Fairness and retaliation: the economics of reciprocity. J Econ Perspect 14(3): 159–181CrossRefGoogle Scholar
  75. Fischbacher U, Gächter S (2006) Heterogeneous social preferences and the dynamics of free riding in public goods, CeDEx Discussion Paper No. 2006–01, University of NottinghamGoogle Scholar
  76. Fleishman JA (1988) The effects of decision framing on other’s behavior on cooperation in a social dilemma. J Conflict Resolut 32: 162–180CrossRefGoogle Scholar
  77. Frank R (2005a) Does absolute income matter?. In: Porta PL, Bruni L (eds) Economics and happiness. Oxford University Press, OxfordGoogle Scholar
  78. Frank R (2005b) Positional externalities cause large and preventable welfare losses. Am Econ Rev 45: 137–141CrossRefGoogle Scholar
  79. Frederick S, Loewenstein G, O’Donoghue T (2002) Time discounting and time preference: a critical review. J Econ Lit 40(2): 351–401CrossRefGoogle Scholar
  80. Frey B (1997) Not just for the money. An economic theory of personal motivation. Edward Elgar Publishing, CheltenhamGoogle Scholar
  81. Frey B, Jegen R (2001) Motivation crowding theory: a survey of empirical evidence. J Econ Surv 15(5): 589–661CrossRefGoogle Scholar
  82. Frey B, Stutzer A (2002) Happiness and economics: how the economy and institutions affect human well-being. Princeton University Press, PrincetonGoogle Scholar
  83. Frey B, Meier S (2004) Pro-social behavior in a natural setting. J Econ Behav Organ 54: 65–88CrossRefGoogle Scholar
  84. Frey B, Stutzer A (2006) Mispredicting utility and the political process. In: McCaffery EJ, Slemrod J (eds) Behavioral public Finance. Russell Sage Foundation, New York, pp 113–140Google Scholar
  85. Frey BS, Neckermann S (2008) Awards: a view from psychological economics. J Psycho 216: 198–208Google Scholar
  86. Friedman M (1953) Essays in positive economics. University of Chicago Press, ChicagoGoogle Scholar
  87. Gächter S (2006) Conditional cooperation: behavioral regularities from the lab and the field and their policy implications. Discussion Papers 2006-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of NottinghamGoogle Scholar
  88. Gärling T, Axhausen KW (2003) Introduction: habitual travel choice. Transportation 30: 1–11CrossRefGoogle Scholar
  89. Gneezy U, Rustichini A (2000) Pay enough or don’t pay at all. Q J Econ 791(810): 791–810CrossRefGoogle Scholar
  90. Gneezy U, List JA (2006) Putting behavioral economics to work: Testing for gift exchange in labor markets using field experiments. Econometrica 74: 1365–1384CrossRefGoogle Scholar
  91. Gowdy JM (2008) Behavioral economics and climate change policy. J Econ Behav Organ 68(3–4): 632–644CrossRefGoogle Scholar
  92. Griskevicius V, Tybur JM, Van den Bergh B (2010) Going green to be seen: status, reputation, and conspicuous conservation. J Pers and Soc Psychol 98: 392–404CrossRefGoogle Scholar
  93. Grothmann T, Patt A (2005) Adaptive capacity and human cognition: the process of individual adaptation to climate change. Glob Environ Change 15: 199–213CrossRefGoogle Scholar
  94. Gunnarsson S, Shogren J, Cherry T (2003) Are preferences for skewness fixed or fungible. Econ Lett 80: 1CrossRefGoogle Scholar
  95. Hahn RW (1989) Economic prescription for environmental problems: how the patient followed the doctor’s orders. J Econ Perspect 3(2): 95–114Google Scholar
  96. Halvorsen B (2008) Effects of norms and opportunity cost of time on household recycling. Land Econ 84(3): 501–516Google Scholar
  97. Hammar H, Carlsson F (2001) Smokers’ decisions to quit smoking. Working Papers in Economics 59, Göteborg University, Department of EconomicsGoogle Scholar
  98. Hanley N, Shogren J (2005) Is cost-benefit analysis anomaly-proof?. Environ Resour Econ 32: 13–34CrossRefGoogle Scholar
  99. Heinrich J, Boyd R (1998) The evolution of conformist transmission and the emergence of between-group differences. Evol Hum Behav 19: 215–241CrossRefGoogle Scholar
  100. Heinrich J, Boyd R, Bowles S, Camerer C, Fehr E, Gintis H, McElreath R (2001) In search of homo economicus: behavioral experiments in 15 small-scale societies. Am Econ Rev 91: 73–78CrossRefGoogle Scholar
  101. Hill SE, Buss DM (2010) Risk and relative social rank: positional concerns and risky shifts in probabilistic decision-making. Evol Hum Behav 31: 219–226CrossRefGoogle Scholar
  102. Hirsch F (1976) The social limits to growth. Harvard University Press, CambridgeGoogle Scholar
  103. Hodgson G (1988) Economics and institutions. Polity Press, CambridgeGoogle Scholar
  104. Hodgson G (2004) Evolutionary economics and habits. In: The international encyclopaedia of economic sociology. Routledge, London and New YorkGoogle Scholar
  105. Hoffman E, Spitzer ML (1982) The Coase theorem: some experimental tests. J Law Econ XXV: 73–98CrossRefGoogle Scholar
  106. Howarth RB (1996) Status effects and environmental externalities. Ecol Econ 16: 25–34CrossRefGoogle Scholar
  107. Howarth RB (2003) Discounting and uncertainty in climate change policy analysis. Land Econ 79: 369–381CrossRefGoogle Scholar
  108. Jackson T (2000) Why is ecological economics not an evolutionary science? 3rd Biennial Conference of the European Society of Ecological Economics (ESEE), Vienna University of Economics and Business AdministrationGoogle Scholar
  109. Jackson T (2005) Motivating sustainable consumption: a review of evidence on consumer behaviour and behavioural change. Report Sustainable Development Research Network, SurreyGoogle Scholar
  110. Jaffe A, Stavins R (1994) The energy paradox and the diffusion of conservation technology. Resour Energy Econ 16(2): 91–122CrossRefGoogle Scholar
  111. Janssen M, Jager W (2002) Stimulating diffusion of green products, co-evolution between firms and consumers. J Evol Econ 12(3): 283–306CrossRefGoogle Scholar
  112. Johansson O (1997) Optimal Pigovian taxes under altruism. Land Econ 73: 297–308CrossRefGoogle Scholar
  113. Johansson-Stenman O (2002) Environmental policy when people’s preferences are inconsistent, non-welfaristic, or simply not developed. In: Bromely D, Paavola J (eds) Economics, ethics and environmental policy: contested choice. Blackwell, London, pp 103–119CrossRefGoogle Scholar
  114. Johansson-Stenman O, Martinsson P (2006) Honestly, why are you driving a BMW?. J Econ Behav Organ 60: 129–146CrossRefGoogle Scholar
  115. Juliosson EA, Gamble A, Gärling T (2007) Loss aversion and price volatility as determinants of attitude towards variable price agreements in the Swedish electricity market. Energy Policy 35(11): 5953–5957CrossRefGoogle Scholar
  116. Kahan D (2005) The logic of reciprocity: trust, collective action and law. In: Gintis H, Bowles S, Boyds R, Fehr E (eds) Moral sentiments and material interests: the foundation of cooperation in economic life. The MIT Press, Cambridge, pp 339–378Google Scholar
  117. Kahneman D, Tversky A (1974) Judgment under uncertainty: heuristics and biases. Science 185(4157): 1124–1131CrossRefGoogle Scholar
  118. Kahneman D, Tversky A (1979) Prospect theory: an analysis of decision under risk. Econometrica XLVII: 263–291CrossRefGoogle Scholar
  119. Kahneman D, Knetsch J, Thaler R (1986) Fairness and the assumptions of economics. J Bus 59(4): 285–300CrossRefGoogle Scholar
  120. Kahneman D, Knetsch J, Thaler R (1990) Experimental tests of the endowment effect and the Coase theorem. J Polit Econ 98: 1325–1348CrossRefGoogle Scholar
  121. Kahneman D, Knetsch J, Thaler R (1991) The endowment effect, loss aversion, and status quo bias. J Econ Perspect 5(1): 193–206Google Scholar
  122. Kahneman D, Knetsch JL (1992) Valuing public goods: the purchase of moral satisfaction. J Environ Econ Manage 22: 55–70CrossRefGoogle Scholar
  123. Kahneman D, Tversky A (1992) Advances in prospect theory: cumulative representation of uncertainty. J Risk Uncertain 5: 297–323CrossRefGoogle Scholar
  124. Kandlikar M, Risbey J, Dessai S (2005) Representing and communicating deep uncertainty in climate change assessments. Geosciences 337(4): 443–445CrossRefGoogle Scholar
  125. Karp L (2005) Global warming and hyperbolic discounting. J Public Econ 89: 261–282CrossRefGoogle Scholar
  126. Knight F (1921) Risk, uncertainty, and profit. Houghton Mifflin, BostonGoogle Scholar
  127. Kotchen MJ, Moore MR (2007) Private provision of environmental public goods: household participation in green-electricity programs. J Environ Econ Manage 53: 1–16CrossRefGoogle Scholar
  128. Kunreuther H, Ginsberg R, Miller L, Sagi P, Slovic P, Borkan B, Katz N (1978) Disaster insurance protection: public policy lessons. Wiley Press, New YorkGoogle Scholar
  129. Kunreuther H, Pauly M (2006) Rules rather than discretion: lessons from Hurricane Katrina. J Risk Uncertain 33: 101–116CrossRefGoogle Scholar
  130. Kunreuther H, Meyer R, Michel-Kerjan E (2010) Overcoming decision biases to reduce losses from natural catastrophe. In: Shafir E (ed) Behavioral foundations of policy. Princeton University Press (forthcoming)Google Scholar
  131. Laibson D (1997) Golden eggs and hyperbolic discounting. Q J Econ 112(2): 443–477CrossRefGoogle Scholar
  132. Lange A, Treich N (2008) Uncertainty, learning and ambiguity in climate policy: classical results and new directions. Clim Change 89: 7–21CrossRefGoogle Scholar
  133. Lange A, Vogt C (2003) Cooperation in international environmental negotiations due to a preference for equity. J Public Econ 87(9–10): 2049–2067CrossRefGoogle Scholar
  134. Levine MD, Koomey JG, McMahon JE, Sanstad A, Hirst E (1995) Energy efficiency policy and market failures. Annu Rev Energy Environ 20: 535–555CrossRefGoogle Scholar
  135. Levy H, Levy M, Solomon S (2000) Microscopic simulation of financial markets: from investor behavior to phenomena. Academic Press, New YorkGoogle Scholar
  136. Lichtenstein S, Slovic P (1971) Reversals of preference between bids and choices in gambling decisions. J Exp Psychol 89: 46–55CrossRefGoogle Scholar
  137. Lindbeck A (1997) Incentives and social norms in household behaviour. Am Econ Rev 87(2): 370–377Google Scholar
  138. Lindseth G (2004) The Cities for Climate Protection Campaign (CCP) and the framing of local climate policy. Local Environ 9(4): 325–336CrossRefGoogle Scholar
  139. List JA (2005) Scientific numerology, preference anomalies, and environmental policymaking. Environ Resour Econ 32(1): 35–53CrossRefGoogle Scholar
  140. List JA (2006) Using experimental methods in environmental and resource economics. Elgar, NorthamptonGoogle Scholar
  141. Loewenstein G (2007) Behavioral economics. In: Woods J (ed) Handbook of the philosophy of science. Elsevier, AmsterdamGoogle Scholar
  142. Loewenstein G, Prelec D (1992) Anomalies in intertemporal choice: evidence and an interpretation. Q J Econ 107: 573–597CrossRefGoogle Scholar
  143. Loewenstein G, Lerner J (2003) The role of affect in decision making. In: Dawson RJ, Scherer KR, Hill Goldsmith H (eds) Handbook of affective science. Oxford University Press, Oxford, pp 619–642Google Scholar
  144. Lorenzoni I, Nicholson-Cole S, Whitmarsh L (2007) Barriers perceived to engaging with climate, change among the UK public and their policy implications. Glob Environ Change 17: 445–459CrossRefGoogle Scholar
  145. Löfgren A, Nordblom K (2006) The importance of habit formation for environmental taxation. Working papers in economics no. 204. Department of Economics, Göteborg UniversityGoogle Scholar
  146. Marx S, Weber E, Orlove B, Leiserowitz A, Krantz D, Roncoli C, Phillips J (2007) Communication and mental processes: experiential and analytic processing of uncertain climate information. Glob Environ Change 17(1): 47–58CrossRefGoogle Scholar
  147. Marechal K (2009) An evolutionary perspective on the economics of energy consumption: the crucial role of habits. J Econ Issues (forthcoming)Google Scholar
  148. McCaffery EJ, Baron J (2006) Thinking about tax. Psychol Public Policy Law 12: 106–135CrossRefGoogle Scholar
  149. McKinely JC (2008) Champion cyclist and now champion guzzler of Austin water. The New York Times. Retrieved from
  150. McFadden D (1999) Rationality for economists. J Risk Uncertain 19(1–3): 73–105CrossRefGoogle Scholar
  151. Mehra R, Prescott E (1985) The equity premium: a puzzle. J Monet Econ 15: 145–161CrossRefGoogle Scholar
  152. Meier S (2007) A survey of economic theories and field evidence on pro-social behavior. In: Frey B, Stutzer A (eds) Economics and psychology: a promising new cross-disciplinary field. MIT Press, BostonGoogle Scholar
  153. Meier S, Stutzer A (2008) Is volunteering rewarding in itself. Economica 75(297): 39–59Google Scholar
  154. Menges R, Schroeder C, Traub S (2005) Altruism, warm glow and the willingness-to- donate for green electricity: an artefactual field experiment. Environ Resour Econ 31: 431–458CrossRefGoogle Scholar
  155. Milinski M, Semmann D, Krambeck HJ, Marotzke J (2006) Stabilizing the Earth’s climate is not a losing game: supporting evidence from public goods experiments. Proc Natl Acad USA 103(11): 3994–3998CrossRefGoogle Scholar
  156. Moore E, Eckel C (2003) Measuring ambiguity aversion. Unpublished manuscript, Department of Economics, Virginia TechGoogle Scholar
  157. Mullainathan S, Thaler R (2000) Behavioral economics. Working Paper No. 00-27, MIT Department of EconomicsGoogle Scholar
  158. Munda G (2004) Social multi-criteria evaluation (SMCE): methodological foundations and operational consequences. Eur J Oper Res 158/3: 662–677CrossRefGoogle Scholar
  159. Nannen V, van den Bergh JCJM (2010) Policy instruments for evolution of bounded rationality: application to climate-energy problems. Technol Forecast Soc Change 77(1): 76–93CrossRefGoogle Scholar
  160. Nash J (2006) Framing effects and regulatory choice: the case of environmental regulation. Notre Dame Law Rev 82(313): 355–369Google Scholar
  161. Norton B, Costanza R, Bishop RC (1998) The evolution of preferences: why ‘sovereign’ preferences may not lead to sustainable policies and what to do about it. Ecol Econ 24: 193–211CrossRefGoogle Scholar
  162. Noussair C, Tucker S (2005) Combining monetary and social sanctions to promote cooperation. Econ Inq 43: 649–660CrossRefGoogle Scholar
  163. O’Connor RE, Bord RJ, Yarnal B, Wiefek N (2002) Who wants to reduce greenhouse gas emissions?. Soc Sci Q 83: 1–17CrossRefGoogle Scholar
  164. O’Donoghue T, Rabin M (1999) Incentives for procrastinators. Q J Econ 114(3): 769–816CrossRefGoogle Scholar
  165. O’Donoghue T, Rabin M (2000) The economics of immediate gratification. J Behav Decis Mak 13: 233–250CrossRefGoogle Scholar
  166. Ostrom E (1990) Governing the commons: the evolution of institutions for collective action. Cambridge University Press, CambridgeGoogle Scholar
  167. Ostrom E, Walker J, Gardner R (1994) Rules games and common-pool resources. University of Michigan Press, Ann ArborGoogle Scholar
  168. Ostrom E (1998) A behavioral approach to the rational choice theory of collective action. Am Polit Sci Rev 92(1): 1–22CrossRefGoogle Scholar
  169. Ozaki R (2009) Adopting sustainable innovation: what makes consumers sign up to green electricity? Bus Strategy Environ 18(5)Google Scholar
  170. Patt AG, Schröter D (2008) Perceptions of climate risk in Mozambique: implications for the success of adaptation strategies. Glob Environ Change 18: 458–467CrossRefGoogle Scholar
  171. Pichert D, Katsikopoulos KV (2008) Green defaults: information presentation and pro-environmental behaviour. J Environ Psychol 28: 63–73CrossRefGoogle Scholar
  172. Postlewaite A (1998) Social status, norms and economic performances: the social basis of interdependent preferences. Eur Econ Rev 42: 779–800CrossRefGoogle Scholar
  173. Rabin M (1993) Incorporating fairness into game theory and economics. Am Econ Rev 83(5): 1281–1302Google Scholar
  174. Rabin M (1998) Psychology and economics. J Econ Lit 36(1): 11–46Google Scholar
  175. Rand D, Nowak M (2009) How reputation could save the Earth. New Sci 2734: 28–29CrossRefGoogle Scholar
  176. Rauscher M (2006) Voluntary emission reductions, social rewards, and environmental policy. CESifo Working Paper No. 1838, MunichGoogle Scholar
  177. Read D, Loewenstein G, Rabin M (1999) Choice bracketing. J Risk Uncertain 19(1–3): 171–197CrossRefGoogle Scholar
  178. Rege M, Telle K (2004) The impact of social approval and framing on cooperation in public good situations. J Public Econ 88: 1625–1644CrossRefGoogle Scholar
  179. Risbey JS, Kandlikar M (2007) Expressions of likelihood and confidence in the IPCC uncertainty assessment process. Clim Change 85: 19–23CrossRefGoogle Scholar
  180. Rodríguez-Sickert C, Guzmán RA, Cárdenas JC (2008) Institutions influence preferences: evidence from a common pool resource experiment. J Econ Behav Organ 67: 215–227CrossRefGoogle Scholar
  181. Rohdin P, Thollander P, Solding P (2007) Barriers to and drivers for energy efficiency in the Swedish foundry industry. Energy Policy 35: 672–677CrossRefGoogle Scholar
  182. Robson AJ (2001) The biological basis of economic behavior. J Econ Lit 39: 11–33CrossRefGoogle Scholar
  183. Robson A (2002) Evolution and human nature. J Econ Perspect 16(2): 89–106CrossRefGoogle Scholar
  184. Safarzynska K, van den Bergh JCJM (2010) Demand-supply coevolution with multiple increasing returns: policy analysis for unlocking and system transitions. Technol Forecast Soc Change 77(2): 297–317CrossRefGoogle Scholar
  185. Sanstad AH, Howarth RB (1994) Consumer rationality and energy-efficiency. In: Proceedings of the 1994 ACEEE summer study on energy-efficiency in buildings 1: Human dimensions. American Council for an Energy-Efficient Environment, Washington, DCGoogle Scholar
  186. Schleich J, Gruber E (2008) Beyond case studies: barriers to energy efficiency in commerce and the services sectors. Energy Econ 30: 449–464CrossRefGoogle Scholar
  187. Schwarz N, Ernst A (2009) Agent-based modeling of the diffusion of environmental innovations: an empirical approach. Technol Forecast Soc Change 76(4): 497–511CrossRefGoogle Scholar
  188. Sekulova F, van den Bergh JCJM (2010) On the happiness costs and benefits of climate change. Working Paper, ICTA-UAB, June 2010Google Scholar
  189. Settle C, Shogren J (2004) Hyperbolic discounting and time inconsistency in a native-exotic conflict. Resour Energy Econ 26(2): 255–274CrossRefGoogle Scholar
  190. Shleifer A (1999) Inefficient markets: an introduction to behavioral finance. Oxford University Press, New YorkGoogle Scholar
  191. Shogren JF (2002) A behavioral mindset on environmental policy. J Socio-Econ 31: 355–369CrossRefGoogle Scholar
  192. Shogren JF, Taylor LO (2008) On behavioral-environmental economics. Rev Environ Econ Policy 2(1): 26–44CrossRefGoogle Scholar
  193. Siebenhüner B (2000) Homo sustinens—Towards a new conception of humans for the science of sustainability. Ecol Econ 32(1): 15–25CrossRefGoogle Scholar
  194. Simon H (1955) A behavioral model of rational choice. Q J Econ 6: 99–118CrossRefGoogle Scholar
  195. Simon H (1959) Theories of decision-making in economics and behavioral science. Am Econ Rev 49(3): 253–283Google Scholar
  196. Simon H (1986) Rationality in psychology and economics. J Bus 59(4): 209–224CrossRefGoogle Scholar
  197. Simon H (1992) Altruism and economics. East Econ J 18(1): 73–83Google Scholar
  198. Slovic P, Tversky A (1974) Who accepts Savage’s axiom. Behav Sci 19: 368–373CrossRefGoogle Scholar
  199. Slovic P, Fishhoff B, Lichtenstein S (1982) Why study risk perception. Risk Anal 2(2): 83–93CrossRefGoogle Scholar
  200. Smith VL (1991) Rational choice: the contrast between economics and psychology. J Polit Econ 99: 877–897CrossRefGoogle Scholar
  201. Spash CL, Hanley N (1995) Preferences, information and biodiversity preservation. Ecol Econ 12(3): 191–208CrossRefGoogle Scholar
  202. Stern P (1992) What psychology knows about energy conservation. Am Psychol 47(10): 1224–1232CrossRefGoogle Scholar
  203. Stern PC (2000) Toward a coherent theory of environmentally significant behavior. J Soc Issues 56(3): 407–424CrossRefGoogle Scholar
  204. Stutzer A, Frey B (2006) What happiness research can tell us about self-control problems and utility misprediction. In: McCaffery EJ, Slemrod J (eds) Behavioral public Finance. Russell Sage Foundation, New York, pp 113–140Google Scholar
  205. Sugden R (2005) Coping with preference anomalies in benefit-cost analysis: a market-simulation approach. Environ Resour Econ 32: 129–160CrossRefGoogle Scholar
  206. Sugden R (2009) Market simulation and the provision of public goods: A non-paternalistic response to anomalies in environmental evaluation. J Environ Econ Manage 57(1): 87–103CrossRefGoogle Scholar
  207. Thaler R (1980) Towards a positive theory of consumer choice. J Econ Behav Organ 1: 39–60CrossRefGoogle Scholar
  208. Thaler R (1999) Mental accounting matters. J Behav Decis Mak 12: 183–206CrossRefGoogle Scholar
  209. Thaler R, Shefrin H (1981) An economic theory of self-control. J Polit Econ 89(2): 392–406CrossRefGoogle Scholar
  210. Titmuss R (1970) The gift relationship: from human blood to social policy. Allen and Unwin, LondonGoogle Scholar
  211. Tversky A, Thaler R (1990) Preference reversals. J Econ Perspect 4(1): 193–205Google Scholar
  212. van den Bergh JCJM, Ferrer-i-Carbonell A, Munda G (2000) Alternative models of individual behaviour and implications for environmental policy. Ecol Econ 32(1): 43–61CrossRefGoogle Scholar
  213. van den Bergh JCJM (2008) Environmental regulation of households? An empirical review of economic and psychological factors. Ecol Econ 66: 559–574CrossRefGoogle Scholar
  214. van den Bergh JCJM, Kallis G (2009) Evolutionary policy. Papers on Economics and Evolution 2009-02, Max Planck Institute of Economics, Evolutionary Economics GroupGoogle Scholar
  215. van den Bergh JCJM (2010) Safe climate policy is affordable—12 reasons. Clim Change (forthcoming). doi: 10.1007/s10584-009-9719-7
  216. van Raaij WF, Verhallen TMM (1983) Patterns of residential energy behavior. J Econ Psychol 4(1): 85–106CrossRefGoogle Scholar
  217. Vatn A (2005) Rationality, institutions and environmental policy. Ecol Econ 55: 203–217CrossRefGoogle Scholar
  218. Veblen T (1899) The theory of the leisure class. MacMillan, New YorkGoogle Scholar
  219. Velez MA, Stranlund JK, Murphy JJ (2009) What motivates common pool resource users? Experimental evidence from the field. J Econ Behav Organ 70: 485–487CrossRefGoogle Scholar
  220. Venkatachalam L (2008) Behavioral economics for environmental policy. Ecol Econ 67: 640–645CrossRefGoogle Scholar
  221. Verplanken B, Aarts H (1999) Habit, attitude, and planned behaviour: is habit an empty construct or an interesting case of automaticity?. Eur Rev Soc Psychol 10: 101–134CrossRefGoogle Scholar
  222. Viscusi WK (1989) Prospective reference theory: toward an explanation of the paradoxes. J Risk Uncertain 2: 235–264CrossRefGoogle Scholar
  223. Viscusi WK (1995) Government action, biases in risk perception, and insurance decisions. Geneva Risk Insur Rev 20(1): 93–110CrossRefGoogle Scholar
  224. Viscusi WK, Zeckhauser RJ (2006) The perception and valuation of the risks of climate change: a rational and behavioral blend. Clim Change 77: 151–177CrossRefGoogle Scholar
  225. Wakker P, Timmermans D, Machielse I (2007) The effects of statistical information on risk and ambiguity attitudes, and on rational insurance decisions. Manage Sci 53: 1770–1784CrossRefGoogle Scholar
  226. Weiss Y, Fershtman C (1998) Social status and economic performance: a survey. Eur Econ Rev 42: 801–820CrossRefGoogle Scholar
  227. Wender R (2005) Frames of reference, the environment, and efficient taxation. Econ Gov 6: 13–31CrossRefGoogle Scholar
  228. Wertenbroch K (1998) Consumption self-control by rationing purchase quantities of virtue and vice. Mark Sci 17(4): 317–337CrossRefGoogle Scholar
  229. Wilson C, Dowlatabadi H (2007) Models of decision making and residential energy use. Annu Rev Environ Resour 32: 169–203CrossRefGoogle Scholar
  230. Winter SG (1964) Economic ‘natural selection’ and the theory of the firm. Yale Econ Essays 4: 225–272Google Scholar
  231. Witt U (2003) Economic policy making in evolutionary perspective. J Evol Econ 13: 77–94CrossRefGoogle Scholar
  232. Yarnal B, O’Connor RE, Shudak R (2003) The impact of local versus national framing on willingness to reduce greenhouse gas emissions: a case study from central Pennsylvania. Local Environ 8(44): 457–469CrossRefGoogle Scholar
  233. Zeckhauser R, Viscusi WK (1990) Risk within reason. Science 248: 559–564CrossRefGoogle Scholar

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

Personalised recommendations