American Economic Journal: Microeconomics
no. 4, November 2023
We propose a model of how multiple societies respond to a common crisis. A government faces a "damned-either-way" policymaking dilemma: aggressive intervention contains the crisis, but the resulting good outcome makes people skeptical about the costly response; light intervention worsens the crisis and causes the government to be faulted for not doing enough. When multiple societies encounter the crisis sequentially, due to this policymaking dilemma, late societies may underperform despite having more information, while early societies can benefit from a dynamic counterfactual effect.
Li, Fei, and Jidong Zhou.
"A Model of Sequential Crisis Management."
American Economic Journal: Microeconomics,
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness