Optimal Credible Warnings

Koffi Akakpo, Marie-Amélie Boucher and Vincent Boucher

Cahiers de recherche from Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques

Abstract: We consider a decision maker who is responsible for issuing fl ood warnings for the population. The population is uncertain about the credibility of the warnings and adjusts its beliefs following false alerts or missed events. We show that low credibility leads the decision maker to issue warnings for lower probabilities of fl ooding. In practice, those probabilities are provided by hydrological forecasts. We therefore use our model to compare welfare under alternative real-world hydrological forecasts. We find that when forecasts include non-realistic extreme scenarios, the economy may remain stuck in a state characterized by many false alerts and poor credibility.

Keywords: Flood warnings; Renewable resource management; Uncertainty (search for similar items in EconPapers)
JEL-codes: C61 D81 Q28 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.crrep.ca/sites/crrep.ca/files/fichier_publications/crrep-2018-13.pdf (application/pdf)

Related works:
Working Paper: Optimal Credible Warnings (2018)
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:lvl:crrecr:1813

Access Statistics for this paper

More papers in Cahiers de recherche from Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques Contact information at EDIRC.
Bibliographic data for series maintained by Manuel Paradis ().