The cost of carbon project, Howard P, Sterner T, et al (2014) Loaded dice: refining the meta-analysis approach to calibrating climate damage functions. Read this article to learn about Choice Under Uncertainty:- 1. : Notes on the Theory of Choice. /Type /Page ", Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2002. Wiley, New York, p 1972, Schmeidler D (1989) Subjective probability and expected utility without additivity. 6 0 obj Springer, Cham. trailer << /Size 457 /Info 374 0 R /Root 390 0 R /Prev 498944 /ID[] >> startxref 0 %%EOF 390 0 obj << /Type /Catalog /Pages 373 0 R /Metadata 388 0 R /FICL:Enfocus 375 0 R /AcroForm 392 0 R /Outlines 394 0 R /PageMode /UseOutlines /OpenAction 391 0 R >> endobj 391 0 obj << /S /GoTo /D [ 393 0 R /Fit ] >> endobj 392 0 obj << /Fields [ ] /DR << /Font << /ZaDb 370 0 R /Helv 371 0 R >> /Encoding << /PDFDocEncoding 372 0 R >> >> /DA (/Helv 0 Tf 0 g ) >> endobj 455 0 obj << /S 3083 /O 3580 /V 3596 /Filter /FlateDecode /Length 456 0 R >> stream Cambridge, UK, and New York: Cambridge University Press, IPCC (2013) Climate change 2013: the physical science basis. /Parent 2 0 R /Type /Page While the variation in price-dividend ratios and the equity risk premium is primarily driven by risk aversion, uncertainty plays a large role in the term structure and is the driver of countercyclical . Math. /Type /Pages For instance, in 10-fold CV 10 times repeated, we get 100 values for the model performance metric (e.g., RMSE). When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:77:y:2020:i:3:d:10.1007_s10640-020-00503-3. /Contents 61 0 R In particular, we show how different concepts and methods of economic decision theory can be directly useful for problems in environmental economics. https://doi.org/10.1007/s11238-015-9512-1, Article >> /Rotate 0 /MediaBox [0.0 0.0 595.913 842.74] "Robust Control and Model Uncertainty." American Economic Review, 91 (2): 60-66. : Quantum Models of Cognition and Decision. ", Sujoy Mukerji & Peter Klibanoff & Northwesern University Massimo Marinacci & Dip. ", Hill , Brian & Bradley , Richard & Helgeson, Casey, 2016. endobj /ProcSet [/PDF /Text /ImageC /ImageB /ImageI] Rev Econ Stat 29(3):161172, Kunreuther H, Heal G, Allen M, Edenhofer O, Field CB, Yohe G (2013) Risk management and climate change. /MediaBox [0.0 0.0 595.913 842.74] ", Loic Berger & Massimo Marinacci, 2017. /Type /Page If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation. /Resources 112 0 R J Eur Econ Assoc 13(6):10221100. 5 0 obj 75(4), 643669 (1961), Etheridge, A.: A Course in Financial Calculus. /Parent 2 0 R 0000017776 00000 n endobj Environmental and Resource Economics /CropBox [0.0 0.0 595.913 842.74] Chapman and Hall/ CRC Press, Boca Raton (2019), MATH Five alternative approaches to characterising structural uncertainty are discussed, including scenario analysis, model selection, model averaging, parameterization and discrepancy. in this case, uncertainty can be decomposed into distinct layers: (i) aleatory or physical uncertainty ( risk ), (ii) model uncertainty or model ambiguity, and (iii) model misspecification. Springer, Cham (2019), Parthasarathy, K.R. Houghton Mifflin, Boston, Koopmans TC (1947) Measurement without theory. Q. J. Econ. ", Ghirardato, Paolo & Maccheroni, Fabio & Marinacci, Massimo, 2004. endobj /Parent 2 0 R /Resources 54 0 R In this example, the consequence function is simply the net output computed as \(\rho (a,\varepsilon ,\theta )=\frac{Y_{{\text {gross}}}-C(a)}{ 1+D(a,\varepsilon ,\theta )}\), where \(Y_{{\text {gross}}}\) is the gross output, \(D(a,\varepsilon ,\theta )\) represents the damages associated with climate change, and C(a) is the abatement cost. (OME) and necessity-motivated entrepreneurship (NME) that are broadly classified in four groups: (1) economic variables, (2) formal institutions, (3) cultural values, and (4) legal . Risk and Economics. . /Resources 82 0 R J Econ Theory 136(1):127, Hansen LP, Sargent TJ (2008) Robustness. The Economic Policy Uncertainty Index is comprised of three components. 68K subscribers in the rstats community. >> 0000007914 00000 n - 210.65.88.143. Macmillan and Co, London, Keynes JM (1936) The general theory of employment, interest, and money. /Trapped /False 30 0 obj /CropBox [0.0 0.0 595.913 842.74] ac[[n$69M,ZI$16&mGBOZ2L?d[6vO2 $k+RK!FH=)\-D'+o!el{y7s>(xO. /Keywords - 116.202.181.12. Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Econometrica 73:18491892, Knight F (1921) Risk, uncertainty, and profit. To illustrate, we provide a simple application in the context of an optimal mitigation policy under climate change. /Type /Page So, we can regard random mechanisms as the thermometers of probability. We embrace a broad perspective of uncertainty with three components: risk (probabilities assigned by a given model), ambiguity (level of confidence in alternative models), and misspecification (potential shortfalls in existing models). Rev Econ Stat 91(1):119, Weitzman ML (2012) GHG targets as insurance against catastrophic climate damages. /Names [(Doc-Start) [3 0 R /XYZ 72 826.58 null] endobj IGIER working papers series, Bocconi University (WP623), Battigalli P, Francetich A, Lanzani G, Marinacci M (2019) Learning and self-confirming long-run biases. /Rotate 0 << 0000006316 00000 n /Rotate 0 Mimeo, New York, Chambers RG, Melkonyan T (2017) Ambiguity, reasoned determination, and climate-change policy. One major direction of this work has been initiated by the seminal contributions of Hansen and Sargent (2001a,b,2002,2003) on robustness in policy analysis. Classical statistical theory assumes that only one (true) model is applied to a sample of data. stream /Type /Page /Rotate 0 ), 2013. 9 0 obj /CropBox [0.0 0.0 595.913 842.74] /Contents 105 0 R It permits, inter alia, to abstract from model misspecification issues (a decision-theoretic attempt to model these issues is in Cerreia-Vioglio etal. /Type /Page /Parent 2 0 R Model uncertainty refers to situations where a baseline model is missing dynamics found in the real world system. To illustrate, we provide a simple application in the context of an optimal mitigation policy under climate change. ", Acemoglu,Daron & Arellano,Manuel & Dekel,Eddie (ed. We can look at the distribution of those RMSE. Theor Econ 11(2):523545, Cerreia-Vioglio S, Maccheroni F, Marinacci M, Montrucchio L (2011) Uncertainty averse preferences. Keywords: Model uncertainty, model comparison, New Keynesian DSGE, nancial fric-tions, monetary policy transmission, scal policy transmission, macroprudential policy transmission, robust monetary policy, forecasting. /Resources 58 0 R Proc Nat Acad Sci 110(17):67546759, Cerreia-Vioglio S, Lars HP, Maccheroni F, Marinacci M (2020) Making decisions under model misspecification. /Type /Page J Clim 19(14):33373353, Ghirardato P, Maccheroni F, Marinacci M (2004) Differentiating ambiguity and ambiguity attitude. Econometrica 78(2):755770, Gilboa I, Postlewaite A, Schmeidler D (2012) Rationality of belief or: why Savages axioms are neither necessary nor sufficient for rationality. /Rotate 0 ", Valentina Bosetti & Elke Weber & Loc Berger & David V. Budescu & Ning Liu & Massimo Tavoni, 2017. The hypothesis that current nationally determined contributions are projected beyond 2030 is made here for these projections. One component quantifies newspaper coverage of policy-related economic uncertainty. This seems necessary since behavioural economics rejects homo economicus as the agent of economic models. Cross-country studies in entrepreneurship have largely ignored this issue. ", Aydogan, Ilke & Berger, Loc & Bosetti, Valentina & Liu, Ning, 2018. /MediaBox [0.0 0.0 595.913 842.74] /Type /Page ", Pierpaolo Battigalli & Simone Cerreia-Vioglio & Fabio Maccheroni & Massimo Marinacci, 2013. https://doi.org/10.1007/978-3-030-49728-6_1, Behavioral Predictive Modeling in Economics, Shipping restrictions may apply, check to see if you are impacted, Intelligent Technologies and Robotics (R0), Tax calculation will be finalised during checkout. Fuzzy Sets Syst. /Contents 95 0 R Correspondence to ", Ilke AYDOGAN & Loic BERGER & Valentina BOSETTI & Ning LIU, 2020. Springer, Cham (2019), Nguyen, H.T., Sriboonchitta, S., Thach, N.N. 38 0 obj ", Hansen, Lars Peter & Sargent, Thomas J., 2007. /Parent 2 0 R Cambridge University Press, Cambridge (2002), Feynman, R.: The concept of probability in quantum mechanics. . We took Chinese A-share listed companies from 2010 to 2018 as the research sample and studied the impact of economic policy uncertainty (EPU) on green technology innovation (GTI). 0000004616 00000 n CNRS, IESEG School of Management, Univ. << Rev Environ Econ Policy 1(1):45, Pindyck RS (2013a) Climate change policy: what do the models tell us? ", Thomas J. Sargent & LarsPeter Hansen, 2001. ", Loc Berger & Johannes Emmerling & Massimo Tavoni, 2017. Examples of contributions Anal. /Names 4 0 R /Parent 2 0 R /Contents 55 0 R 0000005648 00000 n ". ", Pierpaolo Battigalli & Alejandro Francetich & Giacomo Lanzani & Massimo Marinacci, 2016. /CropBox [0.0 0.0 595.913 842.74] /Parent 2 0 R ", Gilboa, Itzhak & Postlewaite, Andrew & Schmeidler, David, 2009. 0000006214 00000 n The global marketplaceeven national, state and local economiesinvolve many economic actors behaving in rational and irrational ways, sustaining a dizzying array of interconnected activity. 0000007021 00000 n Am Econ Rev 83:313317, Nordhaus W, Sztorc P (2013) Dice 2013r: introduction and users manual. 0000014994 00000 n /Subject The emphasis is upon the current effort to promote quantum probability as the most appropriate and reliable model for uncertainty in behavioral economics, both in human decision-making (e.g., in investment portfolio selection), and modeling of financial data, taking into account of human factor. Cambridge University Press, Cambridge, Wald A (1950) Statistical decision functions. Insurance 8. endobj HWyp_G|picA0*! endobj /Contents 67 0 R In: Yager, R., Kacprzyk, J., Pedrizzi, M. If you have already trained simple neural networks yourself, the most intuitive thing to think about is the softmax output of your model, i.e., the percentage values you often see displayed as a result of the model's prediction. In the past 20 years, measures of economic uncertainty have been developed that are purely market price based; structural model based, using data on real fundamentals and asset prices; text based; or survey based. The resulting reorganization of the network leads to less macroeconomic volatility, but at the cost of a decline in aggregate output. >> /Contents 57 0 R Exchange rate models with uncertain and incomplete information predict that investors focus on a small set of fundamentals that changes frequently over time. In this paper we propose empirical methods to specify and measure uncer-tainty associated with economic models, and we study the eects of uncertainty on monetary policy decisions. ", Loc Berger & Valentina Bosetti, 2020. /Parent 2 0 R 100112. Bantam Books, London (2010), Kahneman, D., Tversky, A.: Prospect theory: an analysis of decision under risk. 4) New methods for vulnerability analysis of climate strategies. 0000005429 00000 n The third uses disagreement among economic forecasters as a proxy for uncertainty. << /Parent 2 0 R The main arguments are that an energy modelling exercise that is enriched with an uncertainty assessment which satisfies the requirements is (1) comprehensible in terms of its associated uncertainty and (2) should contribute to a complete understanding of energy scenarios, especially if they are used in decision support. /CropBox [0.0 0.0 595.913 842.74] 35 0 obj (2009). /Rect [136.663 237.241 458.612 257.699] /Contents 49 0 R ", Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2008. /Type /Page When emissions go into the atmosphere, there are social consequences that can be calculated immediately and into the future. The abatement cost function is assumed to be nearly cubic as in Nordhaus and Sztorc (2013). << ", Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2004. This allows to link your profile to this item. >> << : Beyond traditional probabilistic methods in economics. ", I. Gilboa & A. W. Postlewaite & D. Department of Computer Science, University of Texas at El Paso, El Paso, TX, USA, Faculty of Economics, Center of Excellence in Econometrics, Chiang Mai University, Chiang Mai, Thailand, 2021 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG, Nguyen, H.T. See Arrow (1951), Hansen (2014), Marinacci (2015); and Hansen and Marinacci (2016) for a discussion, and Aydogan etal. ", Athanassoglou, Stergios & Xepapadeas, Anastasios, 2012. << << ", Itzhak Gilboa & Andrew Postlewaite & David Schmeidler, 2007. /Resources 84 0 R Stat Sci 31:511515, Hansen LP, Sargent TJ (2001) Robust control and model uncertainty. 0000005211 00000 n A. http://link.springer.com/10.1007/s10640-020-00503-3, https://libkey.io/10.1007/s10640-020-00503-3?utm_source=ideas, Model Uncertainty in Climate Change Economics: A Review and Proposed Framework for Future Research, Probability and Uncertainty in Economic Modeling, Learning and self-confirming long-run biases, Learning and Self-confirming Long-Run Biases, GHG Targets as Insurance Against Catastrophic Climate Damages, Uncertainty Outside and Inside Economic Models, Climate Change Assessments: Confidence, Probability and Decision, Rationality of belief or: why savage's axioms are neither necessary nor sufficient for rationality, Objective rationality and uncertainty averse preferences, Objective Rationality and Uncertainty Averse Preferences, Pollution control with uncertain stock dynamics: When, and how, to be precautious, Journal of Environmental Economics and Management, Pollution Control with Uncertain Stock Dynamics: When, and How, to be Precautious, COP21 climate negotiators responses to climate model forecasts, Selection of climate policies under the uncertainties in the Fifth Assessment Report of the IPCC, Model Uncertainty in Climate Change Economics, Climate policies under climate model uncertainty: Max-min and min-max regret, Climate Policies Under Climate Model Uncertainty: Max-Min and Min-Max Regret, Climate Policies under Climate Model Uncertainty: Max-Min and Min-Max Regret, Optimal Climate Policy When Damages are Unknown, Optimal Greenhouse-Gas Reductions and Tax Policy in the "Dice" Model, Loaded DICE: Refining the Meta-analysis Approach to Calibrating Climate Damage Functions, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota, Managing Catastrophic Climate Risks Under Model Uncertainty Aversion, Journal of Economic Behavior & Organization. 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