Providing disaster information and motivation for mitigation

A social learning model around disaster mitigation investment is formulated. Each household has an option to make an irreversible investment in disaster mitigation. Households are uncertain about which choice is optimal for them, and they have probability assessments for uncertainty, which is represented by beliefs. The model assumes two types of households, households with strong belief and households with weaker belief. Households with strong (weaker) belief are motivated to make (no) mitigation investment. Each household is allowed to observe the actions of other households, while delaying judgment. Learning from its observation of other households´ actions, a household updates its belief. The model describes how each household makes its choice via the learning processes. Analysis of the model shows the existence of an inefficient equilibrium, where delays of households with strong belief occur regardless of a lack of learning. Finally, an institution design to promote disaster mitigation investment is considered.