https://macropaperwarehouse.com/authors/matti-liski/Matti LiskiHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/catastrophes-delays-and-learning/https://macropaperwarehouse.com/papers/catastrophes-delays-and-learning/<p>This paper develops a general model of experimentation under catastrophe risk in which the catastrophe is triggered when a stock variable exceeds an unknown threshold, but occurs only after a stochastic delay. The central contribution is the concept of the &ldquo;legacy of the past&rdquo;: at any planning date, past experiments may have already triggered a catastrophe that has not yet materialized, and the planner cannot observe whether triggering has occurred. The legacy is formally defined as the probability, conditional on survival, that a catastrophe was triggered in the past.</p>