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\title{Strategic Adjustment}


\author{}
% Ethan Bueno de Mesquita\\ \small{Harris School of Public Policy Studies}\\ \small{University of Chicago}}




\date[]% (optional, should be abbreviation of conference name)

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\begin{document}

\begin{frame}
  \titlepage
\end{frame}


\begin{frame}{Key Idea}
	
	Actions ``up the tree" affect actions ``down the tree"

\

	If fail to account for strategic response to policy change, implement ineffective or incorrect policy
	
	\
	
	Have to anticipate adaptation when designing policy
	
\

This also makes it important to measure the right outcome
\end{frame}	



\section{People Adapt}

\begin{frame}{Car Notches 1}
		\begin{figure}
		\begin{center}
			\includegraphics[width = \textwidth]{figures/car1.pdf}
		\end{center}
	\end{figure}
\end{frame}

\begin{frame}{Car Notches 2}
		\begin{figure}
		\begin{center}
			\includegraphics[width = \textwidth]{figures/car2.pdf}
		\end{center}
	\end{figure}
\end{frame}


\begin{frame}{Baby Notches U.S.}
	
	Tax benefits to having child in December instead of January in U.S.\
	
	\
	
	Many more children born in final week of December than first week of January
			
			
	\
	
	  A \$500 increase in  tax benefit of having a child increases the probability a child is born in the last week of December rather than the first week of January by over 25\%
	\end{frame}
		
	\begin{frame}{Evidence of Strategic Adjustment: Baby Notches Australia}
	
	In May 2004 Australia announced a \$3,000 ``baby bonus'' for children born on or after July 1, 2004
	
	\
	
	 More children born on July 1, 2004 in Australia than on any other single day in decades
		
		\
		
		 Over 1000 births  delayed , with over two hundred of them moved by a week or more
		
		\
		
		 In the last week of June,  42\% of births  through pharmaceutical induction  or Cesarean 
		
		\
		
		 In the first week of July,  52\% 
\end{frame}

\section{Efficacy and Adaptation}

\begin{frame}{Efficacy and Adaptation}
	
	People adapt to avoid policy 
	
	\
	
	This limits efficacy and requires careful policy design
		\begin{itemize}
			\item Remember our discussion of college affordability earlier this year
			\end{itemize}
			
		\
		
		Sometimes adaptation also creates opportunities
		\end{frame}
		
\subsection{High Stakes Testing}

		\begin{frame}{Educational Reform}
			
			Hold students, teachers, and schools accountable by evaluating based on standardized test scores
				\begin{itemize}
					\item NCLB
					\its Race to the Top
				\end{itemize}
				
			\
			
Adaptation to improved measurement and heightened incentives
				\begin{itemize}
					\item Get scores just above test thresholds
					\its Shift effort to test-relevant tasks
					\its Shift attention to students close to the test threshold
				\end{itemize}
				
			\end{frame}
			
				
				\begin{frame}{Test Thresholds}
				\begin{figure}
					\begin{center}
						\includegraphics[scale = .5]{figures/regents.pdf}
					\end{center}
				\end{figure}
			\end{frame}
			
			
			\begin{frame}{Topical Focus}
				\begin{figure}
					\includegraphics[height=.8\textheight]{figures/chicago.pdf}
					\end{figure}
					\end{frame}
					
					
			\begin{frame}{Teaching to the Marginal Student}
				\begin{figure}
					\begin{center}
						\includegraphics[scale = .65]{figures/teach-test.pdf}
					\end{center}
				\end{figure}
			\end{frame}



\subsection{Activity}


\begin{frame}{Description}
	
	4 Targets
	
	\
	
	Defender has 100 units to allocate across targets
		\begin{itemize}
			\item Call allocation to target $i$, $x_i$
			\end{itemize}
			
		\
		
		Attacker observes allocations and chooses a target to attack
		
		\
		
		Probability of successful attack on target $i$ is 
		\[ 100 - x_i\]
		
		\end{frame}
		
	
		
\subsection{Counterterrorism}

\begin{frame}{A Model of Optimal Counterterrorism}
	
	Two potential targets: $A$ and $B$
	
	\
	
	
	 $\alpha \in[0,1]$ is government resources devoted to protecting $A$ and $\beta\in[0,1]$ is government resources devoted to defending $B$
		\begin{itemize}
			\item $\alpha + \beta = 1$
			\end{itemize}
			
		\
		
		Terrorists  choose to attack one or the other target.

\
		
		If resources $x$ spent protecting a given target, then the probability of an attack on that target succeeding is $1-x$
		
		\
		
		Terrorists value  two targets equally
	\end{frame}
	
	\begin{frame}{Terrorist Best Response}

If the the government chose $\alpha > \frac{1}{2}$, terrorists' best response is to attack target $B$ 

\

If government chose $\alpha < \frac{1}{2}$, terrorists' best response is to attack target $A$

\

If  government chose $\alpha = \frac{1}{2}$, terrorists are indifferent between attacking $A$ or $B$.
\end{frame}

\begin{frame}{Optimal Counterterrorism}

 If the government expends more  resources protecting one target than another, those resources 	are  entirely wasted because the terrorists adjust, attacking the other target

\

The best the government can do is divide its resources evenly between two targets

\

Strategic adjustment by terrorists forces the government to spread resources thin
\end{frame}

\begin{frame}{Implications 1}
	
	Optimal counterterrorism policy is not  responsive to how much the government
	cares about the two targets
	 	
	\
	
	It is a mistake to particularly defend targets that are of high value to the government
\end{frame}

\begin{frame}{Implications 2}
		
	
	Optimal counterterrorism policy \emph{is} responsive to how much the terrorists care about the two targets	

\

 Suppose the value to the terrorists of the two targets is  $v_A$ and  $v_B$. The terrorists strictly prefer to attack $A$ if:
	\[(1-\alpha)v_A > (1-\beta)v_B\]

	\[ \alpha < \frac{v_A}{v_A + v_B}.\]
	
\

 Government again spreads  resources thin, but weighted by how much the terrorists care about 	each target to equalize expected value of attacking each target

\end{frame}

\begin{frame}{Implications 3}
	
	If there are lots of targets, the problem is even starker
	
	\
	
	Algorithm for optimal counterterrorism policy:
	 	\begin{itemize}
	\item Start by spending on the target considered most valuable by the terrorists
	
	\its  Keep spending until its expected value as a target is equal to 
	the second most valuable target
	
	\its  Then spend on both of those until they are both equal to the third most valuable target
	
	\its Then spend on all three of those until they 
	are all equal to the fourth most valuable target
	
	\its  Continue this process until you are out of mone
\end{itemize}
\end{frame}

\begin{frame}{}
	
	\begin{figure}
		\begin{center}
			\includegraphics[scale=.5]{figures/terror_sky.pdf}
				\end{center}
	\end{figure}
\end{frame}

\begin{frame}{}
	\begin{figure}
		\begin{center}
			\includegraphics[scale=.5]{figures/terror_hostage.pdf}
				\end{center}
	\end{figure}
\end{frame}


\begin{frame}{General Lessons}
	
	You have to think about the behavior of the people your policy is targeted at
	
	\
	
	Adaptation limits efficacy
	
	\end{frame}
	
	
\begin{frame}{War on Drugs}
	

	\begin{columns}[c]
	\column{1.5in}
	Caribbean share
		\begin{itemize}
			\item 1985: 75\%
			\item 1992: 10\%
			\end{itemize}
		
		\
		
	Mexican Share
		\begin{itemize}
			\item 1989: 33\%
			\item 1992: 50\%
			\item 1998: 80\%
			\end{itemize}
	
	
	\column{2.75in}
	
	\
	
	\includegraphics[width=2.75in]{figures/drugs.pdf}
	\end{columns}
\end{frame}
		
			\begin{frame}{A Proposal for Ending Drug Violence in Mexico}
				6 major drug trafficking organizations 
				
				\
				
				Mexican government crafts a public measure of how violent each organizations is
				
				\
				
				United States and Mexican governments  target all  drug enforcement resources on the single most violent organization
				
				\
				
				Only way to avoid being targeted is to  not be most violent
					\begin{itemize}
						\item Creates a race to the bottom
						\end{itemize}
						
				\
				
				Could eliminate violence, but would not disrupt drug trafficking	
			\end{frame}
			
	
	\begin{frame}{Take Aways}
		
		 People adapt in response to policy changes 

\

 In order to anticipate the effect of a policy change, one must take into account how behavior will change

\

Nonetheless, adaptation limits the efficacy of policy

\

Try to find  policies that target the broadest category of behavior your policy is aimed at
 	\begin{itemize}
		\item Tax on carbon rather than implement  CAFE standards
		\its Increase intelligence rather  than  airport security 
	\end{itemize}
\end{frame}
				
\end{document}