Events
We host different speakers at our Economic Theory & Policy Seminar.
Upcoming topics and speakers will be posted below.
15. December 2025, 17:00 until 17:30
Economic Theory & Policy Seminar / A. Brausmann (University of Vienna / Misfortunes Never Come Singly: Managing the Risk of Chain Disasters
Seminar
“Misfortunes Never Come Singly: Managing the Risk of Chain Disasters”
Alexandra Brausmann, opens an external URL in a new window (University of Vienna)
with Lucas Bretschger and Aleksey Minabutdinov
Large economic, ecological, natural and health-related disasters have the poten-
tial to set off a sequence of secondary calamities, initiating cascading effects that
impose substantial additional economic costs. This paper examines the repercus-
sions of contagion effects for optimal public policy. We compare the optimality of
precautionary measures taken ahead of time with a ”reactive” approach to disaster
management, i.e. disaster-mitigation efforts adopted after the gravity of the first
shock has been established. We develop a novel dynamic stochastic framework,
where disaster arrivals are modelled via the Hawkes process which possesses a self-
excitation mechanism. We derive analytical solutions and show that the optimal
policy consists of devoting a stochastic fraction of output to disaster-mitigation.
The mitigation propensity is an increasing function of the Hawkes intensity and
essentially tracks disaster arrivals. The latter implies that the policy is indeed re-
active. This result is in contrast with the existing literature, which does not take
into account the possibility of contagion and therefore finds a constant mitigation
propensity to be optimal.
Event details
- Event location
-
TU Wien
1040 Vienna
Wiedner Hauptstr. 8-10, Seminarroom: Zeichensaal 1 (Freihaus Building, green area, 8th floor) - Organiser
-
ECON
Julia Hutter
julia.hutter@tuwien.ac.at - Public
- Yes
- Entrance fee
- No
- Registration required
- No