Belief-based Energy Technology Development in the United States: ...

Belief-Based Decision Making

The key discovery in this book is a mode of “belief-based decision making” in long-term energy planning. This discovery goes against the prevalent assumption of rational choice in the social sciences. I argue that rational-choice assumption is inapplicable because of the extreme long-term nature of energy planning. It is not usually possible to predict the sociopolitical and economic conditions in the distant future. Rational decisions require supporting information, which often includes impossible long-term foresight. One cannot rationally choose between one unknown and another unknown.

The unknown and uncertainty have always been irresolvable challenges to energy planners. The contrast between synthetic fuels and nuclear power demonstrates how decision makers could respond very differently in ambiguous situations. In the early stage of commercialization, an innovative technology would inevitably be on the borderline of commercial competitiveness. The synfuel industry was rationally cautious about new technology. The borderline stage of impending commercialization extended for over half a century (until the present day). On the contrary, the electric utilities jumped into premature commercialization of nuclear power, in spite of significant losses. Some of them even voluntarily adopted a loss-leader strategy. I argue that different shared beliefs in the relevant communities largely explain the divergence in decision makers' behavior.

It is hard to say whether a belief-based decision is rational or irrational. When the outcomes of choices depend on the unpredictable conditions in the future, decision makers must inevitably base their decisions at least partially on their beliefs. Quite commonly, decision makers have to make a choice without sufficient information that could fully justify any of the possible options. When the cost of acquiring information exceeds the benefit from the information, a rational decision maker is expected to choose without rational deliberations, if the decision maker is truly rational. In such contexts, in other words, it is rational to be irrational.⁸ In long-term energy planning, although the benefit of foresight