Glossary of economics research
Results of search for uncertainty follow:
uncertainty:
If outcomes will occur with a probability that cannot even be estimated, the
decisionmaker faces uncertainty. Contrast risk.
This meaning to uncertainty is attributed to Frank Knight, and is sometimes
referred to as Knightian uncertainty.
The decisionmaker can apply game theory even in such a circumstance, e.g. the
choice of a dominant strategy.
Kreps (1988), p 31, writes that three standard ways of modeling choices made
under conditions of uncertainty are with von Neumann-Morgenstern expected
utility over objective uncertainty, the Savage axioms for modeling subjective
uncertainty, and the Anscombe-Aumann theory which is a middle course between
them.
A recent ad for a new book edited by Haim Levy (Stochastic Dominance:
Investment Decision Making under Uncertainty) considers three ways of
modeling investment choices under uncertainty: by tradeoffs between mean and
variance, by choices made by stochastic dominance, and non-expected
utility approaches using prospect theory.
Source: J. Montgomery, social networks paper;
Kreps, 1988
Contexts: models
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