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Risk aversion and adaptive management: Insights from a multi-armed bandit model of invasive species risk.

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Title: Risk aversion and adaptive management: Insights from a multi-armed bandit model of invasive species risk.
Authors: Springborn, Michael R.1 mspringborn@ucdavis.edu
Source: Journal of Environmental Economics & Management. Sep2014, Vol. 68 Issue 2, p226-242. 17p.
Subjects: Risk aversion, Adaptive natural resource management, Introduced species, Economic decision making, Dynamic programming
Abstract: This article explores adaptive management (AM) for decision-making under environmental uncertainty. In the context of targeting invasive species inspections of agricultural imports, I find that risk aversion increases the relative value of AM and can increase the rate of exploratory action. While calls for AM in natural resource management are common, many analyses have identified modest gains from this approach. I analytically and numerically examine the distribution of outcomes from AM under risk neutrality and risk aversion. The inspection decision is framed as a multi-armed bandit problem and solved using the Lagrangian decomposition method. Results show that even when expected gains are modest, asymmetry in the distribution of outcomes has important implications. Notably, AM can serve to buffer against large losses, even if the most likely outcome is a small loss. [ABSTRACT FROM AUTHOR]
Copyright of Journal of Environmental Economics & Management is the property of Academic Press Inc. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Database: Engineering Source
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DbLabel: Engineering Source
An: 98847028
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PubType: Academic Journal
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  Data: Risk aversion and adaptive management: Insights from a multi-armed bandit model of invasive species risk.
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  Data: <searchLink fieldCode="AR" term="%22Springborn%2C+Michael+R%2E%22">Springborn, Michael R.</searchLink><relatesTo>1</relatesTo><i> mspringborn@ucdavis.edu</i>
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  Data: This article explores adaptive management (AM) for decision-making under environmental uncertainty. In the context of targeting invasive species inspections of agricultural imports, I find that risk aversion increases the relative value of AM and can increase the rate of exploratory action. While calls for AM in natural resource management are common, many analyses have identified modest gains from this approach. I analytically and numerically examine the distribution of outcomes from AM under risk neutrality and risk aversion. The inspection decision is framed as a multi-armed bandit problem and solved using the Lagrangian decomposition method. Results show that even when expected gains are modest, asymmetry in the distribution of outcomes has important implications. Notably, AM can serve to buffer against large losses, even if the most likely outcome is a small loss. [ABSTRACT FROM AUTHOR]
– Name: AbstractSuppliedCopyright
  Label:
  Group: Ab
  Data: <i>Copyright of Journal of Environmental Economics & Management is the property of Academic Press Inc. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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        Value: 10.1016/j.jeem.2014.05.004
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      – Code: eng
        Text: English
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        PageCount: 17
        StartPage: 226
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      – SubjectFull: Risk aversion
        Type: general
      – SubjectFull: Adaptive natural resource management
        Type: general
      – SubjectFull: Introduced species
        Type: general
      – SubjectFull: Economic decision making
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      – SubjectFull: Dynamic programming
        Type: general
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      – TitleFull: Risk aversion and adaptive management: Insights from a multi-armed bandit model of invasive species risk.
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              Text: Sep2014
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