Balancing pre-disaster preparedness and post-disaster relief

Challenges associated with resource allocation to mitigate and recover from natural and man-made disasters inspire new theoretical questions for decision making in the intertwined natural and human world. Disaster loss is determined not only by post-disaster relief but also the pre-disaster mitigation and preparedness. To examine the decision making process at ex ante and ex post disaster stages, we develop a two-stage dynamic programming model that optimally allocates preparedness and relief expenditures. We analytically and numerically solve the model and provide new insights by sensitivity analysis. (C) 2016 Elsevier B.V. All rights reserved.