Document Type
Discussion Paper
Publication Date
12-2020
CFDP Number
2266R
CFDP Revision Date
April 2022
CFDP Pages
41
Journal of Economic Literature (JEL) Code(s)
D82, D83, F50, H12
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.
Recommended Citation
Li, Fei and Zhou, Jidong, "A Model of Sequential Crisis Management" (2020). Cowles Foundation Discussion Papers. 2742.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2742