Document Type

Discussion Paper

Publication Date


CFDP Number


CFDP Revision Date

April 2022

CFDP Pages


Journal of Economic Literature (JEL) Code(s)

D82, D83, F50, H12


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.

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