Theory 53/Precision & Information/Climate adaptation
Adaptation Timing Follows Precision
The claim
The timing of adaptation investment is set by the ratio of projection precision to the cost of being wrong, so uncertain projections can justify earlier action, not later.
01Mechanism
When the cost of being wrong is high and precision is low, the option value of waiting falls, so investment is brought forward.
02Prediction
Investment timing should track the ratio.
03Refutation
Timing tracking expected change alone would remove precision.