A Model of Sequential Crisis Management
American Economic Journal: Microeconomics
vol. 15,
no. 4, November 2023
(pp. 319-49)
Abstract
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.Citation
Li, Fei, and Jidong Zhou. 2023. "A Model of Sequential Crisis Management." American Economic Journal: Microeconomics, 15 (4): 319-49. DOI: 10.1257/mic.20220107Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- H12 Crisis Management
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