Just wanted to give a quick update on stuff relevant to our adjustment costs paper in events of this week.
I think the talk on Tuesday went all right, (though thanks to a technology snafu going from reveal.js to pdf my most useful figure actually showing the bluefin tuna didn’t display – I tried not to let on). I tried to keep the focus pretty big-picture throughout (we ignore these costs when we model, they matter) and avoid being too bold / prescriptive (e.g. not suggesting we found the ‘right’ way to model these costs). I also could not stop myself from calling the adjustment cost models L1 L2 L3 instead of “linear” “quadratic” and “fixed”, or _1,2,3. whoops.
One question asked about asymmetric costs. You may recall we started off doing but ran into some unexpected results where they just looked like the cost free case, possibly due to problems with the code. We should probably at least say this is an area for further study.
Another question asked about just restricting the period of adjustment, say, once every 5 years or so. I answered that we hoped to see what cost structures “induced” that behavior rather than enforcing it explicitly; but I should probably add some mention of this to the text as well.
I think the other questions were more straight forward but don’t remember any particulars.
The Monday meeting was very helpful for me in framing the kind of big questions around the paper:
Can we make this story about more than TAC-managed fisheries? My ideal paper would be something people could cite to show that simply using profit functions with diminishing returns is not a sufficient way to reflect this reality (could be the opposite if reality is more like a transaction fee), and that this mistake can be large. But all our examples are in the fisheries context, so this may take some finesse. (Since we’re aiming for Eco Apps rather than, say, Can Jor Fisheries)
Emphasizing the “Pretty Darn Good” angle – thinking of the policies we derive with adjustment costs not as the “True optimum” but as a “Pretty Darn Good” policy that can be more robust to adjustment costs – (Provided you have intuition to know if those costs are more like a fixed transaction fee or some proportional cost). The last two figures help with this, since they show using policies under different cost regimes than those under which they were computed to be optimal.
Need to figure out what to say about policies that can ‘self-adjust’, e.g. when you don’t have to change the law to respond to the fluctuations. (Jim pointed out that Salmon are the best/only case where you can actually manage by “escapement” since you get a complete population census from the annual runs).
- Stripping down the complexity of the charts
- Conversely, may need to show some examples of the fish stock dynamics (In search for simplicity I’ve focused almost all the graphs on harvest dynamics).
- Calibrating and running the case of quadratic control term for comparison
As a bonus, I quickly ran the tipping point models, and it looks like these stay really close to the Reed solution – e.g. relative to the safer Beverton Holt world, they are much happier to pay whatever the adjustment cost might be to stick with the optimal than they are to risk total collapse. Not sure but maybe should add this into the paper…