Decision Making Under Climate Uncertainty: The Power of Understanding Judgment and Decision Processes

Abstract

On the importance of descriptive models of judgment and choice processes.

The disciplines of economics and political science, as well as applied climate science, have added a great deal to our understanding of the obstacles to the use of climate information. However, in order for climate information to be fully embraced and successfully implemented into risk management, the issue needs to be looked at in terms of risk communication in human decision makers — (as) individuals and (in) groups. What is special about human risk perception and decision making under risk and situations of uncertainty regarding climate? This is where psychology, behavioral economics, and behavioral game theory offer important insights and tools to design effective risk management processes. In this chapter we first discuss uncertainty as a barrier to predictability. We review how normative and descriptive models differ in their postulates about the processes by which people predict the likelihood of uncertain events, choose among actions with uncertain outcomes, and among actions with delayed outcomes. Throughout (this paper we discuss the challenges (and possibly opportunities) that arise from the fact that decision makers employ readily available heuristics, taking advantage of memory and past experience. However, the use of heuristics can also lead to systematic biases, and (b) have multiple and oftentimes conflicting goals, as they are influenced by a range of qualitatively different incentives in their judgments, decisions, and actions. The chapter concludes with suggestions on how to overcome barriers of uncertainty by using insights from behavioral decision research in constructive ways to designing climate risk communication and effective decision environments that will be effective in achieving goals of possible policy interventions.