Radical Uncertainty and Its Implications for Economics

Editor: Paul Ormerod, University College London and Volterra Partners, London, UK, and David Tuckett, University College London, UK

Abstract:

Should we build a high-speed rail link? When should we expect a motorway system to reach saturation? What will be the local effects of a global trade agreement? When should we restrict credit to prevent a bubble? How can we spot emerging risk and take action to prevent it? When should we abandon particular flood defences? When should the EU permit marketing of particular GM crops, if at all? How should countries respond to epidemics in other countries?

Decisions of this sort involve complex judgments. They are a few typical examples from the inbox of challenges requiring decisions from government, business and society in a globalised world that is more rapidly interconnected and inter-dependent than ever before. The expected outcomes of such decisions are both highly consequential for the development of any economy and deeply uncertain.

For about 60 years decision science (particularly in economics and judgement and decision making research in psychology) has fostered the development of top-down dual process models (including risk models) in which decision-makers can be modelled as calculating machines, optimising subjective expected utility under constraints. Can we think of other ways of proceeding and still produce rigorous models capable of empirically validated prediction?

Contributions addressing how decision-making under radical uncertainty can be studied with a view to incorporating it better into economic thinking are invited from workers in any discipline. Ideally, contributions should not exceed 8,000 words (or word equivalent) in length, though longer ones will not be rejected on these grounds.

Open for Submissions


Articles

2016-24
JournalPaper
Josef Falkinger
The Order of Knowledge and Robust Action. How to Deal with Economic Uncertainty?
October 17, 2016 | downloads: 990 | JEL: D80, D81, D83
2016-23
JournalPaper
Yakov Ben-Haim and Maria Demertzis
Decision Making in Times of Knightian Uncertainty: An Info-Gap Perspective
October 10, 2016 | downloads: 1085 | JEL: C02, C18, D81, G10
2016-16
JournalPaper
Carlo Jaeger
The Coming Breakthrough in Risk Research
June 27, 2016 | downloads: 1091 | JEL: B41, C73, D80
2016-7
JournalPaper
Robert Elliott Smith
Idealizations of Uncertainty, and Lessons from Artificial Intelligence
March 21, 2016 | downloads: 1243 | JEL: B59 | 2 comments
2016-6
JournalPaper
Ben Vermeulen and Andreas Pyka
Agent-based Modeling for Decision Making in Economics under Uncertainty
February 04, 2016 | downloads: 2918 | JEL: B52, C63, D81, O32, P10
2016-3
JournalPaper
Sheila Dow
Uncertainty: A Diagrammatic Treatment
January 28, 2016 | downloads: 1641 | JEL: B41, B5, E00, G01 | 2 comments
2016-1
JournalPaper
David Marsay
Decision-Making under Radical Uncertainty: An Interpretation of Keynes’ Treatise
January 07, 2016 | downloads: 1652 | JEL: C62, G18, H12 | 2 comments
2015-41
JournalPaper
Paul Ormerod
The Economics of Radical Uncertainty
November 20, 2015 | downloads: 1936 | JEL: D81, E14, E32 | 2 comments
2015-24
JournalPaper
Roman Frydman, Michael D. Goldberg, and Nicholas Mangee
Knightian Uncertainty and Stock-Price Movements: Why the REH Present-Value Model Failed Empirically
August 18, 2015 | downloads: 1597 | JEL: E44, G12, G14, B40

Discussion Papers

2015-46
DiscussionPaper
Werner Güth and Hartmut Kliemt
How to Cope With (New) Uncertainties: A Bounded Rationality Approach
June 23, 2015 | downloads: 936 | JEL: D80, D01, D03, D21 | discussible | 6 comments
2015-41
DiscussionPaper
Christian Müller
Radical Uncertainty: Sources, Manifestations and Implications
June 04, 2015 | downloads: 705 | JEL: F31, F47, C53 | discussible | 6 comments