You Only Die Once: Managing Discrete Interdependent Risks / Geoffrey Heal, Howard Kunreuther.

Format:

Book

Author/Creator:

Heal, Geoffrey.

Contributor:

National Bureau of Economic Research.

Kunreuther, Howard.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9885.

NBER working paper series no. w9885

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

You Only Die Once

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

This paper extends our earlier analysis of interdependent security issues to a general class of problems involving discrete interdependent risks with heterogeneous agents. There is a threat of an event that can only happen once, and the risk depends on actions taken by others. Any agent's incentive to invest in managing the risk depends on the actions of others. Security problems at airlines and in computer networks come into this category, as do problems of risk management in organizations facing the possibility of bankruptcy, and individuals' choices about whether to be vaccinated against an infectious disease. Surprisingly the framework also covers certain aspects of investment in R&D. Here we characterize Nash equilibria with heterogeneous agents and give conditions for tipping and cascading of equilibria.

Notes:

Print version record

August 2003.