Risk vs. Fundamental Uncertainty in Decision-Making

Lack of Historical Precedent as a Cause of Fundamental Uncertainty about Environmental Tipping Points

Limitations of Cost-Benefit Analysis Under Uncertainty and Catastrophic Risk

Evaluating an Unprecedented Policy Intervention

A global health organization is evaluating whether to fund the development of a novel vaccine technology that uses a completely new biological mechanism. This technology has the potential to eradicate a persistent disease but also carries a theoretical possibility of causing long-term, unforeseen side effects in the population that cannot be predicted with current scientific models. Why is it exceptionally difficult to use a standard economic cost-benefit calculation to decide on this funding?

Policymaking with Unquantifiable Outcomes

A government is considering building a nuclear power plant in a region with a well-documented 0.01% annual probability of a catastrophic earthquake. This situation is an example of fundamental uncertainty because the potential damage from a disaster is immense and difficult to precisely value.

A city council is presented with four different policy proposals. Which of the following proposals involves a decision that is most severely hampered by the presence of fundamental uncertainty, making standard cost-benefit calculations unreliable?

Critique of Marginal Analysis for Unprecedented Policies

Match each decision-making scenario with the type of information problem it best represents.

Analyzing Policy for Artificial General Intelligence

Evaluating Investment in Breakthrough Technology

A government is considering a large-scale geoengineering project to combat climate change by releasing aerosols into the stratosphere. While initial models suggest it could lower global temperatures, the long-term effects on global weather patterns and ecosystems are entirely unknown, with scientists unable to assign probabilities to the various potential catastrophic outcomes. Given this context, policymakers can reliably determine the optimal level of intervention by carefully weighing the expected economic benefits of reduced warming against the expected economic costs of potential negative side effects.