High-risk high-reward investments to mitigate climate change

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Abstract

Some technologies, such as solar or wind power, create certain but relatively small reductions in greenhouse gas emissions. Others, such as carbon sequestration devices, have larger potential upsides, but a greater possibility of failure. Here we show using economic games that people will invest in high-risk high-reward technologies when more certain options will not be sufficient. Groups of players had to contribute enough to avoid a simulated climate change disaster. Players could defect, make a certain contribution or make a risky contribution with a high potential gain. Across four studies using both laboratory (n = 296 and n = 297) and online (n = 501 and n = 499) samples, we found that more players made riskier contributions when necessary targets could not be met otherwise, regardless of the magnitude of potential losses. These results suggest that individuals are willing to invest in risky technology when it is necessary to mitigate climate change.

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Fig. 1: Schematic representation of the game structure.
Fig. 2: Risky contribution decisions.
Fig. 3: Interrupted regression results.
Fig. 4: Percentage of groups that successfully meet the threshold.

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Acknowledgements

We thank A. Levine for helpful feedback and P. W. Kraft for his assistance with the analysis. Funding was provided by the Center for Behavioral Political Economy at Stony Brook University as well as the Research Fund for Faculty in the Arts, Humanities, and lettered Social Sciences at Stony Brook University.

Author information

T.M.A., A.W.D. and R.K. each contributed to the study design, implementation, writing and revisions of the paper. T.M.A. completed the analysis of the results.

Correspondence to Talbot M. Andrews.

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Supplementary Figures 1–4, Supplementary Tables 1–12, Supplementary Results, Supplementary Methods

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