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Catastrophes, delays, and learning

Matti Liski () and François Salanié ()

No 2020.20, Working Papers from FAERE - French Association of Environmental and Resource Economists

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: catastrophe; experimentation; delay. (search for similar items in EconPapers)
JEL-codes: C61 D81 Q54 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2020
New Economics Papers: this item is included in nep-env and nep-ore
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http://faere.fr/pub/WorkingPapers/Liski_Salanie_FAERE_WP2020.20.pdf First version, 2020 (application/pdf)

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