Infinite-horizon dynamic programming and application to management of economies effected by random natural hazards
Authors: Kryazhimskiy AV, Obersteiner M, Smirnov A
Publication Year: 2008
Reference: Applied Mathematics and Computation, 204(2):609-620 [2008]
Abstract
We describe a version of the dynamic programming method, applicable to infinite-horizon discrete-time stochastic processes, and use this technique to solve a stylized problem of management of an economy effected by random natural hazards. Also, we characterize the equilibrium points in a game, in which two economies invest in common prevention measures to mitigate the future impact of natural hazards.