Regretful Decisions and Climate Change

Climate change has made pressing the question of why we do little to reduce greenhouse gas emissions. By analogy to the puzzle of the self-torturer, I argue that even if interpersonal and intergenerational conflicts of interest were resolved, we may still end up in a regretful environmental state when we aim to maximize our net benefit derived from polluting activities. This is because a rational agent with transitive preferences making climate change decisions faces incentives to over-pollute. This is caused by the presence of marginal costs that are uninformative of well-being in an uncertain and intertemporal decision problem.