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Public policy, systemic resilience and viability theory

Author

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  • Girol Karacaoglu
  • Jacek B. Krawczyk

Abstract

Policy problems are typically formulated as optimization problems. Governments are conceptualized as optimizing agents. Risky situations are modelled as outcomes with known probabilities. Under ‘radical’ uncertainty, this model collapses because possible outcomes and their probabilities are unknown. Public policy must then build resilience to ‘unknown unknowns’. Viability theory offers a superior tool for such situations than optimization. The width of the viability kernel represents a mathematical expression for the degree of resilience to unknown shocks. Policy then aims at suitable investments that expand the viability kernel. We demonstrate the design of policy using viability theory with a simple model.

Suggested Citation

  • Girol Karacaoglu & Jacek B. Krawczyk, 2021. "Public policy, systemic resilience and viability theory," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 826-848, November.
    • Handle: RePEc:bla:metroe:v:72:y:2021:i:4:p:826-848
    DOI: 10.1111/meca.12349
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    References listed on IDEAS

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    Cited by:

    1. Mathieu Cuilleret & Luc Doyen & Hélène Gomes & Fabian Blanchard, 2021. "Resilience-based management for small-scale fisheries in the face of global changes and uncertainties," Bordeaux Economics Working Papers 2021-20, Bordeaux School of Economics (BSE).
    2. Cuilleret, Mathieu & Doyen, Luc & Gomes, Hélène & Blanchard, Fabian, 2022. "Resilience management for coastal fisheries facing with global changes and uncertainties," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 634-656.
    3. Jacek B. Krawczyk & Vladimir P. Petkov, 2022. "A Qualitative Game of Interest Rate Adjustments with a Nuisance Agent," Games, MDPI, vol. 13(5), pages 1-24, August.
    4. Sawik, Tadeusz, 2022. "Stochastic optimization of supply chain resilience under ripple effect: A COVID-19 pandemic related study," Omega, Elsevier, vol. 109(C).
    5. Bartosz Sawik, 2023. "Space Mission Risk, Sustainability and Supply Chain: Review, Multi-Objective Optimization Model and Practical Approach," Sustainability, MDPI, vol. 15(14), pages 1-25, July.

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