Waiting Buys Exactly Two Moments: Endogenous Identification in Prediction-Driven Allocation

TL;DR

This paper analyzes the tradeoff between waiting to gather more information and intervening early in a decision-making process under uncertainty. The authors characterize the identification of latent risk moments and show that waiting buys exactly two new moments per additional period. This insight has implications for decision-making under uncertainty.

Why It Matters

The paper's findings have practical significance in areas such as public health, finance, and social welfare, where decision-makers must allocate limited resources under uncertainty. The results can inform the design of more effective intervention strategies and improve resource allocation. Better decision-making can lead to improved outcomes and reduced regret.

Key Findings

• waiting buys exactly two new moments per additional period
• identification of latent risk moments is possible under repeated noisy signals
• regret weighting does not improve allocation welfare