Catastrophes, delays, and learning
Matti Liski () and
François Salanié ()
No 2020.20, Working Papers from FAERE - French Association of Environmental and Resource Economists
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
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)
Working Paper: Catastrophes, delays, and learning (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:fae:wpaper:2020.20
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