A Few Lessons for Climate Change Action from the Literature on Cooperation and Behavioural Economics

Simple economics is characterised by selfish rational actors. More sophisticated economics, including new developments in behavioural economics, tells a different story that is more hopeful for cooperation and allows the discipline to contribute to climate mitigation beyond emissions pricing and cost-benefit analysis. In this short paper we focus on two issues relevant to climate mitigation action:

• Free-riding and the potential for cooperation.
• Why people make systematically bad decisions (for themselves as well as society) and ways to improve decision-making and achieve some costless mitigation.