Dynamically Optimal Treatment Allocation

Many critical treatment assignment problems are inherently dynamic in nature. For example, consider the allocation of job-training programs to newly unemployed individuals. Such programs are often funded through a fixed yearly budget determined in advance by the legislature, while job-seekers arrive at job centers sequentially throughout the year. Policymakers must decide whether to allocate training to each individual, recognizing that each decision affects the remaining budget and the availability of training for future applicants who may benefit even more. In essence, policymakers face a dynamic optimization problem, balancing immediate needs against long-term budgetary constraints.