Resumen La tesis principal del artículo es que la estrategia estándar de modelización económica basada en la construcción de sistemas cerrados y de agentes optimizadores es ineficaz para el tratamiento de la incertidumbre. Puesto que bajo incertidumbre los agentes económicos desconocen cuál es el resultado final de un curso de acción, las decisiones de estos no deberían ser representadas por el cálculo de optimización bajo restricciones. La construcción de sistemas axiomáticos deductivos que conducen a la derivación de un único resultado (...) también será puesta en tela de juicio, y se propondrá su reemplazo por una lógica de investigación basada en simulaciones.The purpose of this essay is to show that the standard approach of economic modelling is ineffective for the issue of uncertainty. Since under uncertainty economic agents do not know the final outcome of a course of action, their decisions should not be represented by the process of constrained optimization. The construction of axiomatic systems that lead to the derivation of a single result is also put into question; its replacement by a simulation-based approach is proposed. (shrink)

In this paper, we study the relationship between Economic Policy Uncertainty (EPU) and carbon dioxide (CO 2 ) emissions. Using an extensive dataset from 23 countries consisting of 6800 firm-year observations, we provide strong evidence that EPU increases firms’ CO 2 emissions. Our main inference is robust when using alternative measures of CO 2 emissions and EPU, alternative econometric specifications and samples, and several approaches to control for possible endogeneity. In a set of additional analyses, we first show that (...) a board’s characteristics (i.e., board gender diversity and board independence) significantly moderate the studied relationship. Second, cross-country characteristics (i.e., government effectiveness, control of corruption, and democracy) seem important in the relationship between EPU and CO 2 emissions. Our findings significantly contribute to the debate on firms’ ethical responsibility in managing climate change and CO 2 emissions. (shrink)

With the advancement of China’s economic transformation, the impact of economic policy uncertainty on family firms has become increasingly significant. The “familism” of family firms makes them more motivated to maintain family harmony, pursue innovative activities, and the long-term development of enterprises when faced with economic policy uncertainty. In this paper, we employed the data of listed Chinese family firms from 2010 to 2018 to analyze the impact of economic policy uncertainty on family business innovation activities, analyze (...) the inherent characteristics of family firm innovation, and find the path that enables the innovative activities of family firms and provides a valuable experience for the innovation of private enterprises in economic policy uncertainty. We provide evidence that economic policy uncertainty positively relates to family firm innovation. Moreover, the relationship is affected by factors such as directors’ executive background and access to state-owned equity. Further analysis indicates that economic policy uncertainty can promote family firms’ innovation activities by improving their risk-taking, internal capital market circulation, and reducing political connections. (shrink)

The impetus of this study is to gauge the nexus between economic policy uncertainty and financial innovation in Brazil, Russia, India, China, and South Africa nations for the period from 2004M1 to 2018M12. This study utilizes both the linear and non-linear autoregressive distributed lag models to evaluate the long-run and the short-run association between EPU and financial innovation; furthermore, the causal effects are investigated by following the non-Granger casualty framework. The results of long-run cointegration, i.e., the test statistics of (...) modified F-test, standard Wald test, and tBDM, reject the null hypothesis and establish the presence of the long-run association between EPU and financial innovation. Conversely, long-run asymmetry cointegration revealed the test statistics of FPSS, WPSS, and tBDM in non-linear estimation. Furthermore, both in the long run and short run, the Wald test results disclose asymmetric effects running from EPU to financial innovation. In regards to the asymmetric impact of EPU on financial innovation, this study documents that the positive and negative shocks in EPU are negatively linked with financial innovation in the long run but are insignificant for short-run effects. Besides, financial innovation measured by R&D investment exhibits a positive linkage with shocks in EPU, implying that uncertainty induces innovation in the economy. Referring to causality effects, this study divulges the feedback hypothesis, i.e., bidirectional causality prevails between EPU and financial innovation in all sample countries. (shrink)

In this paper, we investigate the impact of economic policy uncertainty on the conditional dependence between China and U.S. stock markets by employing the Copula-mixed-data sampling framework. In the case of EPU, we consider the global EPU, the American EPU, and the China EPU. The empirical analysis based on the Shanghai Stock Exchange Composite index in China and the S&P 500 index in the U.S. shows that the tail dependence between China and U.S. stock markets is symmetrical, and the (...) t Copula outperforms alternative Copulas in terms of in-sample goodness of fit. In particular, we find that the t Copula-MIDAS model with EPU dominates the traditional time-varying t Copula in terms of in-sample fitting. Moreover, we observe that both the GEPU and AEPU have a significantly positive impact on the conditional dependence between China and U.S. stock markets, whereas CEPU has no significant impact. The tail dependence between China and U.S. stock markets exhibits an increasing trend, particularly in the recent years. (shrink)

We empirically analyze the impact of economic uncertainty due to the COVID-19 pandemic on the trading volume of each sector in the S&P 500 index. Wavelet coherence analysis is carried out using economic policy uncertainty data and the trading volume of each sector in the S&P 500 index from July 2004 to September 2020. Furthermore, we apply multifractal detrended fluctuation analysis to the trading volume series of all sectors. The wavelet coherence analysis shows that the COVID-19 pandemic has (...) substantially influenced trading volume in all sectors. However, the impact of the pandemic is different from that during the global financial crisis in some sectors, such as information technology, consumer discretionary, and communication services. Because of the lockdown taken to suppress COVID-19, increased remote working and remote learning are the main reasons for these results. Additionally, according to the MF-DFA analysis, the trading volume of all the sectors has clear multifractal characteristics, and they are all nonpersistent. Specifically, trading volumes of the real estate and materials sector are highly correlated, whereas the trading volumes of industry and information technology sectors are comparatively less correlated. (shrink)

In order to implement cost-benefit analysis of protective actions to reduce radiological exposures, one needs to attribute a monetary value to the avoided exposure. Recently, the International Commission on Radiological Protection has stressed the need to take into consideration not only the collective exposure to ionising radiation but also its dispersion in the population. In this paper, by using some well known and some recent results in the economics of uncertainty, we discuss how to integrate these recommendations in (...) the valuation of the benefit of protection. (shrink)

Despite the ubiquity of uncertainty, scientific attention has focused primarily on probabilistic approaches, which predominantly rely on the assumption that uncertainty can be measured and expressed numerically. At the same time, the increasing amount of research from a range of areas including psychology, economics, and sociology testify that in the real world, people’s understanding of risky and uncertain situations cannot be satisfactorily explained in probabilistic and decision-theoretical terms. In this article, we offer a theoretical overview of an (...) alternative approach to uncertainty developed in the framework of the ecological rationality research program. We first trace the origins of the ecological approach to uncertainty in Simon’s bounded rationality and Brunswik’s lens model framework and then proceed by outlining a theoretical view of uncertainty that ensues from the ecological rationality approach. We argue that the ecological concept of uncertainty relies on a systemic view of uncertainty that features it as a property of the organism–environment system. We also show how simple heuristics can deal with unmeasurable uncertainty and in what cases ignoring probabilities emerges as a proper response to uncertainty. (shrink)

Economists have always recognised that human endeavours are constrained by our limited and uncertain knowledge, but only recently has an accepted theory of uncertainty and information evolved. This theory has turned out to have surprisingly practical applications: for example in analysing stock market returns, in evaluating accident prevention measures, and in assessing patent and copyright laws. This book presents these intellectual advances in readable form for the first time. It unifies many important but partial results into a satisfying single (...) picture, making it clear how the economics of uncertainty and information generalises and extends standard economic analysis. Part One of the volume covers the economics of uncertainty: how each person adapts to a given fixed state of knowledge by making an optimal choice among the immediate 'terminal' actions available. These choices in turn determine the overall market equilibrium reflecting the social distribution of risk bearing. In Part Two, covering the economics of information, the state of knowledge is no longer held fixed. Instead, individuals can to a greater or lesser extent overcome their ignorance by 'informational' actions. The text also addresses at appropriate points many specific topics such as insurance, the Capital Asset Pricing model, auctions, deterrence of entry, and research and invention. (shrink)

We analyze the effects of uncertainty on WTA, WTP and the WTA–WTP gap. Extending the approach of Weber (Econom Lett 80:311–315, 2003) to the case of lotteries, we develop an exact expression for the WTA–WTP gap that allows identification of its magnitude under different utility specifications. Reinterpreting and extending results by Gabillon(Econom Lett 116:157–160, 2012), we also identify generally the relationship between an agent’s utility of income and the gap’s algebraic sign, as well as the effects of risk increases (...) on WTA and WTP. Finally, we derive the limit behavior of the gap as income or risk increase. (shrink)

This paper discusses ethical issues surrounding Integrated Assessment Models (IAMs) of the economic effects of climate change, and how climate economists acting as policy advisors ought to represent the uncertain possibility of catastrophe. Some climate economists, especially Martin Weitzman, have argued for a precautionary approach where avoiding catastrophe should structure climate economists’ welfare analysis. This paper details ethical arguments that justify this approach, showing how Weitzman’s “fat tail” probabilities of climate catastrophe pose ethical problems for widely used IAMs. The main (...) claim is that economists who ignore or downplay catastrophic risks in their representations of uncertainty likely fall afoul of ethical constraints on scientists acting as policy advisors. Such scientists have duties to honestly articulate uncertainties and manage (some) inductive risks, or the risks of being wrong in different ways. (shrink)

This paper considers in detail the ontological and normative presuppositions of the state-contingent approach to pricing commodities first introduced by Arrow in his model of general equilibrium under uncertainty, which became a milestone in the theory of finance. By contextualizing Arrow’s fundamental contribution and subsequent developments in finance, it demonstrates how this new conceptual framework implied certain technologies—both intellectual and financial. In showing how theoretical thinking about finance was underlying institutional developments in finance, this paper complements the familiar narrative (...) of the performativity of economics. (shrink)

Although the concept of uncertainty is as old as Epicurus’s writings, and an excellent quantitative theory, with entropy as the measure of uncertainty having been developed in recent times, there has been little exploration of the qualitative theory. The purpose of the present paper is to give a qualitative axiomatization of uncertainty, in the spirit of the many studies of qualitative comparative probability. The qualitative axioms are fundamentally about the uncertainty of a partition of the probability (...) space of events. Of course, it is common to speak of the uncertainty, or randomness, of a random variable, but only the partition defined by the values of the random variable enter into the definition of uncertainty, not the actual values. It is straightforward to add axioms for decision making following the general line of Savage from the 1950s. Indeed, in the spirit of Epicurus, it is really our intuitive feeling about the uncertainty of the future that motivates much of our thinking about decisions. Here, the distinction between the concepts of probability and uncertainty can be made by citing many familiar examples. Without spelling out the technical details, the axiomatization of qualitative probability with uncertainty as the most important primitive concept, it is possible to raise a different kind of question about bounded rationality. This new question is whether or not one should bound the uncertainty in thinking and investigating any detailed framework of decision making. Discussion of this point is certainly different from the question of bounding rationality by not maximizing expected utility. In practice, we naturally bound uncertainty in our analysis of decision-making problems. As in the case of formulating an alternative for maximizing expected utility, so is the case of rational alternatives to maximizing uncertainty. There are several issues to consider. In the spirit of my other work in qualitative probability, I explore alternatives rather than attempt to give a definitive argument for one single solution. (shrink)

Draw on the protection motivation theory, this study investigated the impacts of intolerance of uncertainty on “untact” buying behavior, and examined the sequential mediating role of the perceived risk of COVID-19 variants and protection motivation. A total of 1,564 young individuals participated in the survey. The serial mediation analysis results reveal that intolerance of uncertainty influences one’s “untact” buying behavior through “perceived risk of COVID-19 variants - protection motivation.” Both internal and external factors worked together to accelerate the (...) transition of individuals’ consumption behavior during COVID-19 pandemic. Therefore, our findings generate important implications for public mental health and economic recovery in the post-COVID-19 era. (shrink)

This book presents a detailed economic analysis of professional football at club level, using a combination of economic reasoning and statistical and econometric analysis. Most of the original empirical research reported in the book is based on English club football. A wide range of international comparisons help emphasize both the broader relevance as well as the unique characteristics of the English experience. Specific topics include: the links between football clubs' financial strength and competitive balance and uncertainty of outcome; the (...) determinants of professional footballers' compensation; measuring the football manager's contribution to team performance, the determinants of managerial change, and its effects on team performance; patterns of spectator demand for attendance; predicting match results, betting on football, and the market in football clubs' company shares. The book concludes with an extended discussion of the major economic policy issues currently facing football's legislators and administrators worldwide. (shrink)

The emergence of COVID-19 places the economy at risk of recession or worst, depression. A sharp decline in the country’s economic growth is primarily caused by the weak consumption of locals and non-existence of foreign tourists in the country. On the other hand, disruptions of the supply chain in the manufacturing and retails sectors make the situation much worse. With clear uncertainties in mind, government agencies must lay down economic policies, monetary and fiscal, that would boost the confidence of the (...) consumers and producers. Lastly, a clear and coordinated efforts of the national and local government together with economic agencies of the country must be present at this time of the pandemic. (shrink)

Tauber, a leading figure in history and philosophy of science, offers a unique autobiographical overview of how science as a discipline of thought has been characterized by philosophers and historians over the past century. He frames his account through science’s – and his own personal – quest for explanatory certainty. During the 20th century, that goal was displaced by the probabilistic epistemologies required to characterize complex systems, whether in physics, biology, economics, or the social sciences. This “triumph of (...) class='Hi'>uncertainty” is the inevitable outcome of irreducible chance and indeterminate causality. And beyond these epistemological limits, the interpretative faculties of the individual scientist invariably affects how data are understood. Whereas positivism had claimed radical objectivity, post-positivists have identified how a web of non-epistemic values and social forces profoundly influence the production of knowledge. Tauber presents a case study of these claims by showing how immunology has incorporated extra-curricular social elements in its theoretical development and how these in turn have influenced interpretive problems swirling around biological identity, individuality, and cognition. The correspondence between contemporary immunology and cultural notions of selfhood are strong and striking. Just as uncertainty haunts science, so too does it hover over current constructions of personal identity, self knowledge, and moral agency. Across the chasm of uncertainty, science and selfhood speak. (shrink)

In this landmark work of economic sociology, Lucien Karpik introduces the theory and practical tools needed to analyze markets for singularities. Singularities are goods and services that cannot be studied by standard methods because they are multidimensional, incommensurable, and of uncertain quality. Examples include movies, novels, music, artwork, fine wine, lawyers, and doctors. Valuing the Unique provides a theoretical framework to explain this important class of products and markets that for so long have eluded neoclassical economics. With this innovative (...) theory--called the economics of singularities--Karpik shows that, because of the uncertainty and the highly subjective valuation of singularities, these markets are necessarily equipped with what he calls "judgment devices"--such as labels, brands, guides, critics, and rankings--which provide consumers with the credible knowledge needed to make reasonable choices. He explains why these markets are characterized by the primacy of competition by qualities over competition by prices, and he identifies the conditions under which singularities are constructed or are in danger of losing their uniqueness. After demonstrating how combinations of the numerous and multiform judgment devices can be used to identify different market models, Karpik applies his analytical tools to the functioning of a large number of actual markets, including fine wines, movies, luxury goods, pop music, and legal services. (shrink)

Abstract.Mandatory risk assessment is intended to reassure concerned citizens and introduce reason into the heated European controversies on genetically modified crops and food. The authors, examining a case of risk assessment of genetically modified oilseed rape, claim that the new European legislation on risk assessment does nothing of the sort and is not likely to present an escape from the international deadlock on the use of genetic modification in agriculture and food production. The new legislation is likely to stimulate the (...) kind of emotive reactions it was intended to prevent. In risk assessment exercises, scientific uncertainty is turned into risk, expressed in facts and figures. Paradoxically, this conveys an impression of certainty, while value-disagreement and conflicts of interest remain hidden below the surface of factuality. Public dialogue and negotiation along these lines are rendered impossible. The only option left to critics is to resort to claims of fear and to call for new risk assessments to be performed, on and on again. Science is allowing itself to be abused by accepting the burden of proof in matters more suited to reflection and negotiation. The specific challenge to science would be to take care of itself – rethinking the role and the limitations of science in a social context, and, thereby gaining the strength to fulfill this role and to enter into dialogue with the rest of society. Scientific communities appear to be obvious candidates for prompting reflection and dialogue on this issue. (shrink)

We investigate how firms adjust corporate pension plans in response to economic policy uncertainty (EPU). Using a sample of US-listed firms, we find that firms increase pension underfunding levels when facing higher EPU. The result is robust to controlling for pension portfolio returns, discount rates, plan sizes, pension liability, numbers of employees, other macroeconomic factors, difference-in-differences and instrumental variable estimation, and additional evidence of pension risk-shifting. Further analysis reveals that financial distress and information asymmetry induced through EPU are the (...) potential channels. The effect is stronger for firms having CEOs being excessively paid, using cash flow as a performance metric in CEO compensation, paying high dividends, and having short-term institutional investors, whereas the presence of unions, positive corporate culture, and social capital alleviate the effect. Notably, managers, not shareholders, appear to be the party reaping the benefits. Our findings suggest that firms may shift risk to employees in response to heightened uncertainty and institutional characteristics play a moderating role in this crucial business ethics issue. (shrink)

Technological innovation is almost always investigated from an economic perspective; with few exceptions, the specific technological and social nature of innovation is often ignored. We argue that a novel way to characterise and make sense of different types of technological innovation is to start considering uncertainty. This seems plausible since technological development and innovation almost always occur under conditions of uncertainty. We rely on the distinction between, on the one hand, uncertainty that can be quantified (e.g. probabilistic (...) risk) and, on the other, deep forms of uncertainty that may resist the possibility of being quantified (e.g. severe or fundamental uncertainties). On the basis of these different ingredients of uncertainty in technological innovation, we propose a new taxonomy that reveals the technological nature of innovation. Unlike previous taxonomies employed to handle different types of technological innovations, our taxonomy does not consider the economic value of innovation alone; it is much more oriented towards societal preferences and forms of technological uncertainty. Finally, we investigate the coherence of our proposal with the dual nature of technological artefacts, showing that innovation can be grounded on structural and functional factors and not just on economic ones. (shrink)

Value analysis establishes a way to practice functional analysis which enables to think all matter as sets of functions. The study of the correlations between the phases of activation of these functions leads to consider the aggregation of correlated activation functions as an attractor in a configuration space. This point of view allows figuring out general behaviors reducing the conceptual gap between microeconomics and macroeconomics. Then, based on a characterization of complex adaptive systems in terms of functional attractors, the theory (...) links together value and physical magnitudes, like work or energy and action. The evolution of these systems is studied from the viewpoints of learning or of voluntary and involuntary interactions with others described in the ultimate way by the strategies, or operators, of which they make use. Three kinds of uncertainties are emphasized among which the uncertainty between the structure and the business outlook of a system is recreated through an analogy between physics and economics. The rationality of the complex functional systems economics is based on value and on market or environment awareness. Equilibria establish potential of agents or players whose profiles are built through the equivalence between a time-dependent payoff at equilibrium and the regular value of the corresponding attractor. The law of supply and demand is naturally founded on unbiased profiles of agents and can be a means of uncertainty reduction and of growth. Freedoms are opportunities to grow, when they result in confidence, and to bear risks in decision-making through an innovative process. (shrink)

In this landmark work of economic sociology, Lucien Karpik introduces the theory and practical tools needed to analyze markets for singularities. Singularities are goods and services that cannot be studied by standard methods because they are multidimensional, incommensurable, and of uncertain quality. Examples include movies, novels, music, artwork, fine wine, lawyers, and doctors. Valuing the Unique provides a theoretical framework to explain this important class of products and markets that for so long have eluded neoclassical economics. With this innovative (...) theory--called the economics of singularities--Karpik shows that, because of the uncertainty and the highly subjective valuation of singularities, these markets are necessarily equipped with what he calls "judgment devices"--such as labels, brands, guides, critics, and rankings--which provide consumers with the credible knowledge needed to make reasonable choices. He explains why these markets are characterized by the primacy of competition by qualities over competition by prices, and he identifies the conditions under which singularities are constructed or are in danger of losing their uniqueness. After demonstrating how combinations of the numerous and multiform judgment devices can be used to identify different market models, Karpik applies his analytical tools to the functioning of a large number of actual markets, including fine wines, movies, luxury goods, pop music, and legal services. (shrink)

The works of Knight (1921) and Keynes (1921, 1936) seek to clarify confusion about uncertainty. According to these authors, a precise analysis of uncertainty is required, in order to obtain a clear significance of the concept and understand the consequences for the decision process. Consequently, Knight and Keynes study the content of the decision process in uncertainty and converge towards similar views on the mobilization of confidence. Their works thus go beyond a simple examination of uncertainty, (...) by also throwing light on the role and function of confidence in economic analysis. These works demonstrate that confidence is the prerequisite for individual action under uncertainty. (shrink)

The theory of the firm has recently undergone a dramatic transformation, drawing heavily on the pathbreaking work of Armen Alchian. This volume explores his contribution to the debate, including essays by Harold Demetz, Ben Klein, Jerry Jordan and Art Devany.

This article explores recent developments in the sociology of the arts, namely the new theoretical framework set up by the French sociologist Pierre-Michel Menger in order to approach the artistic activity. It aims to show how he has shaped new tools of understanding and modelling for exploring the arts, as a particular world of action. Laying down the foundation of a conception of action related to symbolic interactionism and drawing on the economic analysis of risk and uncertainty, Menger move (...) towards a model where uncertainty, not determinism, is the default category. Uncertainty is thus the principle unifying the analysis and understanding of the particularities of the arts, and the main argument in integrating sociological and economic studies on artistic activities. Correlatively, artistic creation is qualified as an act of work, the creative work being defined as a system of action in uncertain horizon. Within this model, the artists are seen less like “rational fools” and more like Bayesian actors, adopting strategies for managing risk and uncertainty. (shrink)

Climate change harmfully affects social and natural systems. These outcomes adversely affect the human and natural systems, resulting in adopting related-response measures whose implementation yields similar outcomes, especially when poorly designed. Climate-related projects, actions, and policies cause harmful environmental impacts, even though the United Nations Convention on Climate Change and its subsequent instruments urge parties, when dealing with climate change, to employ methods that preserve the quality of the environment. Few studies have established the effects of these environmentally, economically, culturally, (...) and socially unsound mechanisms on public participation, although research usually proves that ecological and environmental citizenship can enhance climate action. The study also highlights gaps in the common understanding of public participation in climate action. This reflection analyses the relationships between public participation and climate response measures and concludes that uncertainty related to response measures could affect the perception of climate action by the public. The reflection, therefore, shows that many international environmental law legal instruments, policies, and scholarships attempt to address the issue. (shrink)

lNTRODUCTlON ln itself the world is neither governed by a principle of order, irremediably abandoned to disorder, structured with iron determinism, ...

Stock markets accurately reflect countries’ economic health, and stock returns are tightly related to economic indices. One popular area of financial research is the factors that influence stock returns. Several investigations have frequently cited macroeconomic factors, among numerous elements. Therefore, this study focuses on the empirical analysis of the relationship between macroeconomic factors and stock market returns. When a stock market becomes increasingly volatile, it becomes susceptible to economic uncertainty news, and information on social media platforms. Thus, we incorporated (...) a new dimension of economic uncertainty news sentiment for stock return predictions. We employed the daily data ofgold index, crude oil price, interest rate, exchange rate, and stock returns for a set of countries from January 2010 to December 2020. Subsequently, to compute coefficients, we conducted a regression analysis using one of the more sophisticated approaches: single-layer neural networks and ordinary least square regression. In addition, we only computed EUNS for the period of the fiscal budget announcement for the US, Turkey, and Hong Kong. The results indicate that the gold index, interest rate, and exchange rate are highly significant and negative macroeconomic factors for all analyzed countries. These findings also indicate that EUNS is important and detrimental for projecting stock returns. (shrink)

Economic motivations are key drivers of human behavior. Unfortunately, they are largely overlooked in literature related to medical decisionmaking, particularly with regard to end-of-life care. It is widely understood that the directions of a proxy acting in bad faith can be overridden. But what of cases in which the proxy or surrogate appears to be acting in good faith to effectuate the patient’s values, yet doing so directly serves the decision-maker’s financial interests? Such situations are not uncommon. Many patients care (...) as deeply about economic wellbeing of their families as they do for their own lives and health. This brief work examines three scenarios that raise ethical issues regarding the role of pecuniary motives in making critical medical decisions. Each scenario presents a potential financial conflict of interest between an incapacitated patient and a third-party decision-maker and offers a framework for integrating ethical and legal concerns into clinical care. It is our hope that this work prepares physicians for unexpected ethical conflicts of interest and enables them to further the interests of his or her patients. (shrink)

DIVA new look at Kenneth Arrow’s classic study of the economics of health care: is his formulation still relevant 40 years later?/div.

Bovine Growth Hormone has been beset by controversy since before its public introduction. The reasons for this are numerous but all rooted in the economic and policy uncertainty surrounding a transitional agriculture. The major sources of the controversy are outlined in this paper as the author explains how little of the ensuing discussion has been based on positive knowledge of either bGH or its likely farm impact. The paper, as a result, raises important questions about the implications of addressing (...) agriculture policy changes in the highly emotionally charged context of present American agriculture. (shrink)

A review of U. Mäki (ed.). Fact and Fiction in Economics, Cambridge: Cambridge University Press, 2003. pp. xvi 384. ISBN 0521 00957. As people interested mainly in theory, methodologists and philos...

Professor Dreze is a highly respected mathematical economist and econometrician. This book brings together some of his major contributions to the economic theory of decision making under uncertainty, and also several essays. These include an important essay on 'Decision theory under moral hazard and state dependent preferences' that significantly extends modern theory, and which provides rigorous foundations for subsequent chapters. Topics covered within the theory include decision theory, market allocation and prices, consumer decisions, theory of the firm, labour contracts, (...) and public decisions. (shrink)

In theories which contribute to the understanding of uncertainty in entrepreneurial action, scholars have traditionally attributed a negative connotation to uncertainty. This paper seeks to posit an understanding of uncertainty derived from Greek and Indian philosophy, where action of the human agent is not deterred by uncertainty, and rather, occurs despite uncertainty. This idea may be beneficial in making future entrepreneurs less apprehensive about uncertainty, by helping them locate the lessons from philosophy. I look (...) at existing ideas that explore uncertainty in entrepreneurial motivation, and present a multidisciplinary approach which sees uncertainty as a force that increases intent of action, rather than deterring it by drawing on the understanding of consequence and action in Aristotelean thought and Hindu philosophy, and extend the concepts of tuche and karma to posit a theoretical position which sees uncertainty as a factor that encourages entrepreneurial action and motivation. The understanding of uncertainty in management literature has been approached primarily from two disciplinary positions - economics and organisational theory. In economics, the classical understanding of uncertainty which commenced with Frank Knight’s Risk, Uncertainty and Profit (1921), was largely abandoned in later years for a more quantifiable approach of calculating risk. Uncertainty, characteristically nebulous and difficult to grapple with, is unquantifiable. It is defined, in fact, by Knight, as something which cannot be predicted and quantified. Thus, in academics, where almost all disciplines try to make sense of the way the world works, uncertainty has always been a problematic concept. (shrink)

The role of uncertainty within an organization’s environment features prominently in the business ethics and management literature, but how corporate investment decisions should proceed in the face of uncertainties relating to the natural environment is less discussed. From the perspective of ecological economics, the salience of ecology-induced issues challenges management to address new types of uncertainties. These pertain to constraints within the natural environment as well as to institutional action aimed at conserving the natural environment. We derive six (...) areas of ecology-induced uncertainties and propose ecology-driven real options as a conceptual approach for systematically incorporating these uncertainties into strategic management. We combine our results in an integrative investment framework and illustrate its application with the case of carbon constraints. (shrink)

This book demonstrates that the state-contingent approach provides the best way to think about all problems in the economics of uncertainty, including problems...

Integrated assessment models play a major role in the science and policy of climate change. Similarly to other widely used computational tools for addressing socially relevant problems, IAMs need to account for the key uncertainties characterizing processes and socio-economic responses. In the case of climate change, these are particularly complex given the very long-term nature of climate and the deep uncertainty characterizing technological and human systems. Here we draw from philosophical discussion of mathematical modeling of social problems and review (...) the role of uncertainty in climate-economic modeling. In agreement with the literature, we highlight the crucial role of epistemic uncertainty in IAMs. We posit that the normative components of models, more than the physical and socio-techno-economic ones, are the most fraught by uncertainty and yet the least understood. We suggest a research agenda to explore uncertainties of evaluation frameworks, transcending the current implicit normativity of IAMs. (shrink)