Environmental risk and welfare valuation under imperfect information

Yoshifumi Konishi, Jay S. Coggins

研究成果: Article査読

13 被引用数 (Scopus)

抄録

Consumers are often uninformed, or unsure, about the ambient level of environmental risk. An optimal policy must jointly determine efficient levels of self-protection, information provision, and public risk mitigation efforts. Unfortunately, conventional welfare measures are not amenable to welfare analysis in the presence of imperfect information. We develop a theoretical welfare measure, called quasi-compensating variation, that is a natural extension of compensating variation (CV). We show that this welfare measure offers not only a money metric of the "value of information," but also a means to appropriately evaluate the welfare effects of various policies when consumers are imperfectly informed about ambient risk. This welfare measure allows us to obtain a number of results that the traditional CV measure fails to offer. In particular, we show that the consumer's willingness to pay for a (small) environmental risk reduction is higher for those who underestimate ambient risk than for those who overestimate or are perfectly informed if the marginal return to self-protection increases with ambient risk.

本文言語English
ページ(範囲)150-169
ページ数20
ジャーナルResource and Energy Economics
30
2
DOI
出版ステータスPublished - 2008 5月
外部発表はい

ASJC Scopus subject areas

  • 経済学、計量経済学

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