An exploratory approach for adaptive policymaking by using multi-objective robust optimization

Abstract

Developing robust policies for complex systems is a profound challenge because of their nonlinear 
and unpredictable nature. Dealing with these characteristics requires innovative approaches. A 
possible approach is to design policies that can be adapted over time in response to how the future 
unfolds. An essential part of adaptive policymaking is specifying under what conditions, and in 
which way, to adapt the policy. The performance of an adaptive policy is critically dependent on 
this: if the policy is adapted too late or too early, significant deterioration in policy performance 
can be incurred. An additional complicating factor is that in almost any policy problem, a multiplicity 
of divergent and potentially conflicting objectives has to be considered. In this paper we tackle both 
problems simultaneously through the use of multi-objective robust simulation optimization. Robust 
optimization helps in specifying appropriate conditions for adapting a policy, by identifying conditions 
that produce satisfactory results across a large ensemble of scenarios. Multi-objective optimization helps 
in identifying such conditions for a set of criteria, and providing insights into the tradeoffs between 
these criteria. Simulation is used for evaluating policy performance. This approach results in the identification 
of multiple alternative conditions under which to adapt a policy, rather than a single set of conditions. 
This creates the possibility of an informed policy debate on trade-offs. The approach is illustrated through 
a case study on designing a robust policy for supporting the transition toward renewable energy systems in 
the European Union. The results indicate that the proposed approach can be efficiently used for developing 
policy suggestions and for improving decision support for policymakers. By extension, it is possible to apply 
this methodology in dynamically complex and deeply uncertain systems such as public health, financial systems, 
transportation, and housing.