Abstract
How to plan for catastrophes that may be under way? In a simple but general model of experimentation, a decision-maker chooses a flow variable contributing to a stock that may trigger a catastrophe at each untried level. Once triggered, the catastrophe itself occurs only after a stochastic delay. Consequently, the rhythm of past experimentations determines the arrival of information. This has strong implications for policies in situations where the planner inherits a history of experiments, like climate change and pandemic crisis. The structure encompasses canonical approaches in the literature.
Keywords
catastrophes, experimentation, delays;
JEL codes
- C61: Optimization Techniques • Programming Models • Dynamic Analysis
- D81: Criteria for Decision-Making under Risk and Uncertainty
- Q54: Climate • Natural Disasters • Global Warming
Reference
Matti Liski, and François Salanié, “Catastrophes, delays, and learning”, TSE Working Paper, n. 20-1148, September 2020.
See also
Published in
TSE Working Paper, n. 20-1148, September 2020