Revisiting Arrow-Lind: Managing Sovereign Disaster Risk

摘要: In their seminal paper of 1970, Kenneth Arrow and Robert Lind investigated how governments should treat uncertainty in the evaluation public investment decisions. Their main argument was that if risks associated with a are publicly borne (e.g., through taxation), total cost risk bearing is insignificant. Besides spreading ability, they also argued that, as able to pool large number assets, portfolio highly diversified. Consequently, (AL) suggested can behave neutrally evaluate investments only expected net present (social) value.