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The problem of prevention

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  • Benoît, Jean-Pierre
  • Dubra, Juan

Abstract

Many disasters are foreshadowed by insufficient preventative care. In this paper, we argue that there is a true problem of prevention, in that insufficient care is often the result of rational calculations on the part of agents. We identify three factors that lead to dubious efforts in care. First, when objective risks of a disaster are poorly understood, positive experiences may lead to an underestimation of these risks and a corresponding underinvestment in prevention. Second, redundancies designed for safety may lead agents to take substandard care. Finally, elected officials have an incentive to underinvest in prevention for some disasters, especially those that are relatively unlikely.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2462.

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Date of creation: 29 Mar 2006
Date of revision: 30 Mar 2007
Handle: RePEc:pra:mprapa:2462

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Keywords: Prevention; Accidents; Volunteer's Dilemma; Learning; Career Concerns;

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  1. Dubra, J., 1999. "Overconfidence in Search," Working Papers 99-10, C.V. Starr Center for Applied Economics, New York University.
  2. Marco Ottaviani & Peter Sorensen, 1999. "Professional Advice," Game Theory and Information 9906003, EconWPA.
  3. Holmstrom, Bengt, 1999. "Managerial Incentive Problems: A Dynamic Perspective," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 169-82, January.
  4. Gollier, Christian, 2002. "Optimal Prevention of Unknown Risks: A Dynamic Approach with Learning," IDEI Working Papers 139, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Scharfstein, David S & Stein, Jeremy C, 1990. "Herd Behavior and Investment," American Economic Review, American Economic Association, vol. 80(3), pages 465-79, June.
  6. Cornes, Richard, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 259-71, February.
  7. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The economics of career concerns: part 1 :comparing information structures," ULB Institutional Repository 2013/9617, ULB -- Universite Libre de Bruxelles.
  8. Gaube, Thomas, 2001. "Group size and free riding when private and public goods are gross substitutes," Economics Letters, Elsevier, vol. 70(1), pages 127-132, January.
  9. Glenn MacDonald & Leslie M. Marx, 2001. "Adverse Specialization," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 864-899, August.
  10. Rothschild, Michael, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 689-711, July/Aug..
  11. Dasgupta, Amil & Prat, Andrea, 2005. "Asset Price Dynamics When Traders Care About Reputation," CEPR Discussion Papers 5372, C.E.P.R. Discussion Papers.
  12. Juan Dubra, 2004. "Optimism and Overconfidence in Search," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 198-218, January.
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