The Impact of Behavioral Preferences on Climate Policy: Developing a DICE-PT Model Using Prospect Theory for the MENA Region

Articles in Press

Document Type : Research Paper

Authors

1 Department of Economics, University of Shiraz, Shiraz, Iran.

2 Department of Disaster and Crisis Management, York University, Toronto, Canada.

10.22059/jte.2025.394053.1008999

Abstract

Prospect theory, as one of the most important theories in behavioral economics, shows that decision-makers perceive losses more than gains in conditions of uncertainty and adopt a behavior dependent on the reference point when faced with changes. This study develops the DICE model and combines it with prospect theory to present a new model, DICE-PT, that examines the impact of decision-making behaviors on climate change in the Middle East and North Africa (MENA) region. In this model, economic and climate variables are analyzed from the perspective of cognitive biases and the paths of changes in greenhouse gas emissions, production, consumption, and investment are assessed in a behavioral framework. The findings show that decision-makers in this region follow different decision-making patterns in response to climate change, which can affect emission reduction policies and sustainable development. The innovation of this study is in developing the DICE model using prospect theory, which helps to better understand decision-making behaviors in climate policymaking.

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Journal of Economic Research (Tahghighat- E- Eghtesadi)

Articles in Press, Accepted Manuscript
Available Online from 15 September 2025

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History

  • Receive Date: 24 April 2025
  • Revise Date: 01 August 2025
  • Accept Date: 15 September 2025

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