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Economics of Pessimism and Optimism

Theory of Knightian Uncertainty and Its Applications

139,09 € Lieferbar ab 08.04.2017


This is the first book to investigate individual’s pessimistic and optimistic prospects for the future and their economic consequences based on sound mathematical foundations. The book focuses on fundamental uncertainty called Knightian uncertainty, where the probability distribution governing uncertainty is unknown, and it provides the reader with methods to formulate how pessimism and optimism act in an economy in a strict and unified way. After presenting decision-theoretic foundations for prudent behaviors under Knightian uncertainty, the book applies these ideas to economic models that include portfolio inertia, indeterminacy of equilibria in the Arrow-Debreu economy and in a stochastic overlapping-generations economy, learning, dynamic asset-pricing models, search, real options, and liquidity preferences. The book then proceeds to characterizations of pessimistic (ε-fearful) and optimistic (ε-hopeful) behaviors under Knightian uncertainty and  people’s inherent pessimism (surprise aversion) and optimism (surprise loving).  Those characterizations are shown to be useful in understanding several observed behaviors in the global financial crisis and in its aftermath.  The book is highly recommended not only to researchers who wish to understand the mechanism of how pessimism and optimism affect economic phenomena, but also to policy makers contemplating effective economic policies whose success delicately hinges upon people’s mindsets in the market.


Titel: Economics of Pessimism and Optimism
Autoren/Herausgeber: Hiroyuki Ozaki, Kiyohiko G. Nishimura
Ausgabe: 1st ed. 2017

ISBN/EAN: 9784431559016

Format: 23,5 x 15,5 cm
Produktform: Hardcover/Gebunden
Gewicht: 0 g
Sprache: Englisch - Newsletter
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