Cognitive Modeling of Household Economic Behaviors during Extreme Events

Traditional economic models of household behavior are generally not well suited for modeling the economic impacts of extreme events, due to (1) their assumptions of perfect rationality and perfect information; (2) their omission of important non-market factors on behavior; and (3) their omission of the unusual, scenario-specific conditions that extreme events pose on decision making. To overcome these shortcomings, we developed a cognitive-economic model of household behavior that captures and integrates many of these important psychological, non-market, and extreme-event effects. This model of household behavior was used in prototype simulations of how a pandemic influenza can impact the demand for food in a large metropolitan city. The simulations suggest that the impacts to food demand caused by household stress, fear, hoarding, and observing others doing the same could be far greater than those caused simply by the disease itself.