Catastrophes, delays, and learning

Matti Liski and François Salanié
Additional contact information
Matti Liski: Aalto University
François Salanié: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

Working Papers from HAL

Abstract: We propose a simple and general model of experimentation in which reaching untried levels of a stock variable may, after a stochastic delay, lead to a catastrophe. Hence, at any point in time a catastrophe might well be under way, due to past experiments. We show how to measure this legacy of the past from prior beliefs and the chronicle of stock levels. We characterize the optimal policy as a function of the legacy and show that it leads to a new protocol for planning that applies to a general class of problems, encompassing the study of pandemics or climate change. Several original policy predictions follow, e.g., experimentation can stop but resume later.

Keywords: Catastrophes; Experimentation; Delays (search for similar items in EconPapers)
Date: 2025-05-06
Note: View the original document on HAL open archive server: https://hal.science/hal-05057687v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05057687v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05057687

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().