By: Luca Dellanna

Date: April 21, 2020

In: Personal Blog

Key Subjects

• Regulations tend to be optimized for everyday life.
  • Not for emergency situations (such as the current pandemic).
• Need for circuit breakers.
  • Alternative regulations that kick-in fast during an emergency.
• Fast, low-cost adaptation.
  • Immediate interruption of normal procedures.
  • Achieve maximum results when the costs for doing so are still low.
  • Normal regulations may get you to the same place, but much slower (too slow).
  • Similar to natural reflexes (when you touch something hot, hand “automatically” retracts).
• Based on leading indicators.
  • Lagging indicators obviously result in circuit breakers being triggered much later.
• Clear and objective conditions.
  • Execute the circuit breaker only when warranted.
  • Easier to accept be costs of activating the circuit breaker in case of a false positive.
  • Provide protection as needed, without the risk of any bureaucratic delay.
• Preserve accountability.
  • Allow for fast, not reckless action.
  • Relax regulations only when the cost of not doing so is high.
• Necessary and likely to have some false positives.
  • High trigger sensitivity to avoid false negatives automatically leads to some false positives occurring (see “Testing – Sensitivity and Specificity“.
  • Only works when the cost of a false negative is (much) higher than the cost of a false positive.
    • Tail risks: when consequences are large enough to justify apparent “over-reactions” to false positives.
  • If not the case, circuit breakers will be quickly opposed.
• Avoids permanent over-extension of the state.
  • Circuit breaking measures are not permanently in place.
  • Also avoids unnecessary side effects.
    • More permanent relief bills likely stuffed with unwanted provisions.
• Effective government tool in situations of weak leadership and/or slow bureaucracy.
  • Introduce circuit breaking regulations “when the scars” are fresh.
  • Otherwise, will never happen.