Adaptation to catastrophic events with two layers uncertainty: Central planner perspective

Bondarev, Anton and Krysiak, Frank C.. (2018) Adaptation to catastrophic events with two layers uncertainty: Central planner perspective. WWZ Working Papers, 2018 (10).

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Official URL: https://edoc.unibas.ch/61489/

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We study the optimal adaptation to extreme climate events by the central gov- ernment in a setup where events are dynamically uncertain and the government does not know the true probabilities of events. We analyze dierent policy decision rules minimizing expected welfare losses for sites with dierent expected damages from the catastrophic event. We nd out under which conditions it is optimal to wait before implementation of a prevention measures to obtain more information about the underlying probabilistic process. This waiting time crucially depends on the information set of the planner and the implemented learning procedure. We study dierent learning procedures on behalf of the planner ranging from simple perfect learning to two-layers Bayesian updating in the form of Dirichlet mixture processes.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Umweltökonomie (Krysiak)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Bondarev, Anton A. and Krysiak, Frank Christian
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:33
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Identification Number:
  • handle: RePEc:bsl:wpaper:2018/10
edoc DOI:
Last Modified:08 Mar 2018 11:00
Deposited On:08 Mar 2018 11:00

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