[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/a/taf/uteexx/v65y2020i2p89-113.html
   My bibliography  Save this article

Game-theoretic modeling of pre-disaster relocation

Author

Listed:
  • Vicki M. Bier
  • Yuqun Zhou
  • Hongru Du
Abstract
Sea-level rise due to climate change is clearly an important problem. This paper uses game theory in conjunction with discounting to explore strategies by which governments might encourage pre-disaster relocation by residents living in areas at high risk of flooding due to sea-level rise. We find that offering a subsidy (e.g., a partial buyout) can be effective if government has a significantly lower discount rate than residents. We also present extensions to our model, exploring the use of a fixed annual benefit after relocation (instead of a one-time subsidy), and hyperbolic instead of standard exponential discounting. Numerical sensitivity analysis elucidates many important factors affecting the timing of anticipatory relocation, since for example relocating too soon may be costly to both residents and government if flooding risk is increasing only gradually. This conceptual model also provides a foundation for future studies that quantify the model with more realistic parameter values (e.g., realistic estimates of flooding probabilities), and alternative behavioral models of resident decision making.

Suggested Citation

  • Vicki M. Bier & Yuqun Zhou & Hongru Du, 2020. "Game-theoretic modeling of pre-disaster relocation," The Engineering Economist, Taylor & Francis Journals, vol. 65(2), pages 89-113, April.
  • Handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:89-113
    DOI: 10.1080/0013791X.2019.1677837
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/0013791X.2019.1677837
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/0013791X.2019.1677837?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mathew E. Hauer & Jason M. Evans & Deepak R. Mishra, 2016. "Millions projected to be at risk from sea-level rise in the continental United States," Nature Climate Change, Nature, vol. 6(7), pages 691-695, July.
    2. Kunreuther,Howard C. & Pauly,Mark V. & McMorrow,Stacey, 2013. "Insurance and Behavioral Economics," Cambridge Books, Cambridge University Press, number 9780521608268, September.
    3. Stephane Hallegatte & Colin Green & Robert J. Nicholls & Jan Corfee-Morlot, 2013. "Future flood losses in major coastal cities," Nature Climate Change, Nature, vol. 3(9), pages 802-806, September.
    4. repec:cup:judgdm:v:2:y:2007:i::p:79-95 is not listed on IDEAS
    5. Kjell Hausken & Jun Zhuang, 2016. "The strategic interaction between a company and the government surrounding disasters," Annals of Operations Research, Springer, vol. 237(1), pages 27-40, February.
    6. Kunreuther,Howard C. & Pauly,Mark V. & McMorrow,Stacey, 2013. "Insurance and Behavioral Economics," Cambridge Books, Cambridge University Press, number 9780521845724, September.
    7. Anne van Aaken & Janis Antonovics & Jonathan B. Wiener, 2016. "The Tragedy of the Uncommons: On the Politics of Apocalypse," Global Policy, London School of Economics and Political Science, vol. 7, pages 67-80, May.
    8. Berry Gersonius & Richard Ashley & Assela Pathirana & Chris Zevenbergen, 2013. "Climate change uncertainty: building flexibility into water and flood risk infrastructure," Climatic Change, Springer, vol. 116(2), pages 411-423, January.
    9. Silva, Kampanart & Ishiwatari, Yuki & Takahara, Shogo, 2014. "Cost per severe accident as an index for severe accident consequence assessment and its applications," Reliability Engineering and System Safety, Elsevier, vol. 123(C), pages 110-122.
    10. Sherri Brokopp Binder & Alex Greer, 2016. "The Devil Is in the Details: Linking Home Buyout Policy, Practice, and Experience After Hurricane Sandy," Politics and Governance, Cogitatio Press, vol. 4(4), pages 97-106.
    11. V. Smith & Jared Carbone & Jaren Pope & Daniel Hallstrom & Michael Darden, 2006. "Adjusting to natural disasters," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 37-54, September.
    12. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    13. Klaus Eisenack & Susanne C. Moser & Esther Hoffmann & Richard J. T. Klein & Christoph Oberlack & Anna Pechan & Maja Rotter & Catrien J. A. M. Termeer, 2014. "Explaining and overcoming barriers to climate change adaptation," Nature Climate Change, Nature, vol. 4(10), pages 867-872, October.
    14. Erwann O. Michel-Kerjan, 2010. "Catastrophe Economics: The National Flood Insurance Program," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 165-186, Fall.
    15. Matteo Giuliani & Andrea Castelletti, 2016. "Is robustness really robust? How different definitions of robustness impact decision-making under climate change," Climatic Change, Springer, vol. 135(3), pages 409-424, April.
    16. Maya K. Buchanan & Robert E. Kopp & Michael Oppenheimer & Claudia Tebaldi, 2016. "Allowances for evolving coastal flood risk under uncertain local sea-level rise," Climatic Change, Springer, vol. 137(3), pages 347-362, August.
    17. Peiqiu Guan & Jun Zhuang, 2015. "Modeling Public–Private Partnerships in Disaster Management via Centralized and Decentralized Models," Decision Analysis, INFORMS, vol. 12(4), pages 173-189, December.
    18. Kevin E. Trenberth & John T. Fasullo & Theodore G. Shepherd, 2015. "Attribution of climate extreme events," Nature Climate Change, Nature, vol. 5(8), pages 725-730, August.
    19. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    20. Rosina Bierbaum & Joel Smith & Arthur Lee & Maria Blair & Lynne Carter & F. Chapin & Paul Fleming & Susan Ruffo & Missy Stults & Shannon McNeeley & Emily Wasley & Laura Verduzco, 2013. "A comprehensive review of climate adaptation in the United States: more than before, but less than needed," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(3), pages 361-406, March.
    21. May Cheung & Jun Zhuang, 2012. "Regulation Games Between Government and Competing Companies: Oil Spills and Other Disasters," Decision Analysis, INFORMS, vol. 9(2), pages 156-164, June.
    22. Daniel Seaberg & Laura Devine & Jun Zhuang, 2017. "A review of game theory applications in natural disaster management research," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 89(3), pages 1461-1483, December.
    23. Miyuki Hino & Christopher B. Field & Katharine J. Mach, 2017. "Managed retreat as a response to natural hazard risk," Nature Climate Change, Nature, vol. 7(5), pages 364-370, May.
    24. Nagurney, Anna & Pan, Jie & Zhao, Lan, 1992. "Human migration networks," European Journal of Operational Research, Elsevier, vol. 59(2), pages 262-274, June.
    25. repec:inm:ordeca:v:14:y:2015:i:4:p:173-189 is not listed on IDEAS
    26. Hausken, Kjell & Zhuang, Jun, 2013. "The impact of disaster on the strategic interaction between company and government," European Journal of Operational Research, Elsevier, vol. 225(2), pages 363-376.
    27. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Radosevic, Slavo, 2022. "Techno-economic transformation in Eastern Europe and the former Soviet Union – A neo-Schumpeterian perspective," Research Policy, Elsevier, vol. 51(1).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vicki Marion Bier, 2017. "Understanding and Mitigating the Impacts of Massive Relocations Due to Disasters," Economics of Disasters and Climate Change, Springer, vol. 1(2), pages 179-202, July.
    2. Howard Kunreuther, 2020. "Risk Management Solutions for Climate Change–Induced Disasters," Risk Analysis, John Wiley & Sons, vol. 40(S1), pages 2263-2271, November.
    3. Anna Marandi & Kelly Leilani Main, 2021. "Vulnerable City, recipient city, or climate destination? Towards a typology of domestic climate migration impacts in US cities," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 11(3), pages 465-480, September.
    4. Shitao Gong & Xin Gao & Zhou Li & Linyan Chen, 2021. "Developing a Dynamic Supervision Mechanism to Improve Construction Safety Investment Supervision Efficiency in China: Theoretical Simulation of Evolutionary Game Process," IJERPH, MDPI, vol. 18(7), pages 1-29, March.
    5. D. J. Rasmussen & Scott Kulp & Robert E. Kopp & Michael Oppenheimer & Benjamin H. Strauss, 2022. "Popular extreme sea level metrics can better communicate impacts," Climatic Change, Springer, vol. 170(3), pages 1-17, February.
    6. Howard Kunreuther & Elke U. Weber, 2014. "Aiding Decision-Making to Reduce the Impacts of Climate Change," NBER Working Papers 19776, National Bureau of Economic Research, Inc.
    7. Xiaodong Du & Hongli Feng & David A. Hennessy, 2017. "Rationality of Choices in Subsidized Crop Insurance Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(3), pages 732-756.
    8. repec:cup:judgdm:v:10:y:2015:i:4:p:365-385 is not listed on IDEAS
    9. Mathias Kifmann & Kerstin Roeder & Clarissa Schumacher, 2014. "A note on quasi-hyperbolic discounting, risk aversion, and the demand for insurance," Economics Bulletin, AccessEcon, vol. 34(2), pages 772-783.
    10. A. R. Siders, 2019. "Social justice implications of US managed retreat buyout programs," Climatic Change, Springer, vol. 152(2), pages 239-257, January.
    11. Carolyn Kousky & Erwann Michel-Kerjan, 2017. "Examining Flood Insurance Claims in the United States: Six Key Findings," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(3), pages 819-850, September.
    12. Dillingh, Rik, 2016. "Empirical essays on behavioral economics and lifecycle decisions," Other publications TiSEM 0e2143e3-bd86-4302-90eb-e, Tilburg University, School of Economics and Management.
    13. Kjell Hausken & Jun Zhuang, 2016. "How companies and governments react to disasters," Journal of Risk and Reliability, , vol. 230(4), pages 417-426, August.
    14. Anthony Charles Milordis & William Hale Butler & Tisha Joseph Holmes, 2023. "What is slowing progress on climate change adaptation? Evaluating barriers to planning for sea level rise in Florida," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(8), pages 1-26, December.
    15. W.J. Wouter Botzen & Howard Kunreuther & Erwann Michel-Kerjan, 2015. "Divergence between individual perceptions and objective indicators of tail risks: Evidence from floodplain residents in New York City," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 10(4), pages 365-385, July.
    16. Bakkensen, Laura A. & Ma, Lala, 2020. "Sorting over flood risk and implications for policy reform," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    17. Xinyu Fu & Jie Song, 2017. "Assessing the Economic Costs of Sea Level Rise and Benefits of Coastal Protection: A Spatiotemporal Approach," Sustainability, MDPI, vol. 9(8), pages 1-14, August.
    18. Abinash Bhattachan & Matthew D. Jurjonas & Priscilla R. Morris & Paul J. Taillie & Lindsey S. Smart & Ryan E. Emanuel & Erin L. Seekamp, 2019. "Linking residential saltwater intrusion risk perceptions to physical exposure of climate change impacts in rural coastal communities of North Carolina," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 97(3), pages 1277-1295, July.
    19. Robert Hartwig & Greg Niehaus & Joseph Qiu, 2020. "Insurance for economic losses caused by pandemics," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 45(2), pages 134-170, September.
    20. Marieka M. Klawitter & C. Leigh Anderson & Mary Kay Gugerty, 2013. "Savings And Personal Discount Rates In A Matched Savings Program For Low-Income Families," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 468-485, July.
    21. Jindrich Matousek & Tomas Havranek & Zuzana Irsova, 2022. "Individual discount rates: a meta-analysis of experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 318-358, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:89-113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/UTEE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.