Economics e-Journal on Uncertainty:-

Special Issue on Radical Uncertainty and Its Implications for Economics Economics, 2015

My Comments

These present various views on how best to consider uncertainty within economics, and its implications. The consensus is that there is more to uncertainty than mere numeric ‘Bayesian’ probability.


Idealizations of Uncertainty, and Lessons from Artificial Intelligence, Robert Elliott Smith

AI has shown that models of human reasoning that are based on the idealisations of mathematics or logic do not embody the robust decision-making in the face of ontological uncertainty observed in humans.

… We must consider how humans do reason under real-world uncertainty, where such idealisations do not apply. This suggests the reinclusion of observations from sciences that have focused in vivo human behaviour (psychology, sociology, anthropology, etc.). By focusing on this non-idealised decision-making, we may be able to have more realistic models of economic actors, as well as substantial advances in AI.

I think that possibly the inclusion of observations from different, less idealised, mathematics and logic could also lead to better normative models – and possibly descriptive models.

How to Cope With (New) Uncertainties: A Bounded Rationality Approach Werner Güth and Hartmut Kliemt

Model updates can’t be just ‘rational’ in the narrow sense. Instead it needs to follow some appropriately  justifiable procedure.

If mathematical language is used correctly it should make us alert of what we do not know rather than conceal it from our views as many models of full rationality tend to do.

Decision–Making under Radical Uncertainty: An Interpretation of Keynes’ Treatise David Marsay (me)

I interpret Keynes as offering alternatives to the usual probability theory. One is where there are many possible probability measures, each of which corresponds to different long-run behaviours. There may be ‘critical instabilities’, at which the behaviour can switch from conforming to the status quo to conforming to another measure. If we are interested in economic crashes then we are interested in such changes.

More … (TBC)


Uncertainty: A Diagrammatic Treatment Sheila Dow

It is urgent that policy address the potential for uncertainty to aggravate continuing instability. But until the different ways of analysing uncertainty are acknowledged and understood, the policy discourse will be mired in confusion.

I have some detailed quibbles.

Dave Marsay

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