Dear all, we kindly invite you to our next Economic Theory & Policy talk on Mon, 15th of December 2025 - 4:00 PM - TU Wien, Seminarroom: Zeichensaal 1 (Freihaus building, green area, 8th floor) "Misfortunes Never Come Singly: Managing the Risk of Chain Disasters" Alexandra Brausmann (University of Vienna) https://sites.google.com/view/alexandra-brausmann/ (with Lucas Bretschger and Aleksey Minabutdinov) Large economic, ecological, natural and health-related disasters have the potential to set off a sequence of secondary calamities, initiating cascading effects that impose substantial additional economic costs. This paper examines the repercussions of contagion effects for optimal public policy. We compare the optimality of precautionary measures taken ahead of time with a "reactive" approach to disaster management, i.e. disaster-mitigation efforts adopted after the gravity of the first shock has been established. We develop a novel dynamic stochastic framework, where disaster arrivals are modelled via the Hawkes process which possesses a self- excitation mechanism. We derive analytical solutions and show that the optimal policy consists of devoting a stochastic fraction of output to disaster-mitigation. The mitigation propensity is an increasing function of the Hawkes intensity and essentially tracks disaster arrivals. The latter implies that the policy is indeed reactive. This result is in contrast with the existing literature, which does not take into account the possibility of contagion and therefore finds a constant mitigation propensity to be optimal. Further events and details: https://www.tuwien.at/en/mg/econ/events Best, Julia Hutter Julia Hutter TU Wien Institute of Statistics and Mathematical Methods in Economics Research Group Economics Phone: +43 1 58801 10531 Mail: julia.hutter@tuwien.ac.at<mailto:julia.hutter@tuwien.ac.at> https://econ.tuwien.ac.at/