@article {15283,
	title = {On Modeling and Interpreting the Economics of Catastrophic Climate Change},
	journal = {Review of Economics and Statistics},
	volume = {91},
	number = {1},
	year = {2009},
	pages = {1-19},
	abstract = {
	With climate change as prototype example, this paper analyzes the implications of structural uncertainty for the economics of low probability, high-impact catastrophes. Even when updated by Bayesian learning, uncertain structural parameters induce a critical {\textquotedblleft}tail fattening{\textquotedblright} of posterior-predictive distributions. Such fattened tails have strong implications for situations, like climate change, where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. This paper shows that the economic consequences of fat-tailed structural uncertainty (along with unsureness about high-temperature damages) can readily outweigh the effects of discounting in climate-change policy analysis.

},
	url = {http://dx.doi.org/10.1162/rest.91.1.1},
	author = {Martin L. Weitzman}
}
