Strategies for dealing with climate change must incorporate and quantify all the relevant uncertainties, and be designed to manage the resulting risks. Here we employ the best available knowledge so far, summarized by the three working groups of the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC AR5), to quantify the uncertainty of mitigation costs, climate change dynamics, and economic damage for alternative carbon budgets. We rank climate policies according to different decision-making criteria concerning uncertainty, risk aversion and intertemporal preferences. Our findings show that preferences over uncertainties are as important as the choice of the widely discussed time discount factor. Climate policies consistent with limiting warming to 2 °C above preindustrial levels are compatible with a subset of decision-making criteria and some model parametrizations, but not with the commonly adopted expected utility framework.
