Knightian Uncertainty
{'Code': '04050100', 'Directorate': {'Abbreviation': 'SBE', 'LongName': 'Direct For Social, Behav & Economic Scie'}, 'Division': {'Abbreviation': 'SES', 'LongName': 'Divn Of Social and Economic Sciences'}}
{'SignBlockName': 'Daniel H. Newlon', 'PO_EMAI': None, 'PO_PHON': None}
This project is part of a large body of research on the theory of               decision making under uncertainty.  Industry and government                     decision makers benefit from the new and better methods of                      decision making produced by this line of research.  This project                develops an alternative formulation of choice under uncertainty                 based on the distinction by Frank Knight between risk and                       uncertainty.  According to Knight a gamble is risky if the                      probabilities are known and it is uncertain if the probabilities                are not known.  A Knightian theory of decision making is                        developed in this project and used to explain incomplete markets,               bargaining, entrepreneurship, business decisions made by routine                rules of thumb, and asset prices.                                                                                                                               The results of this project could lead to a major breakthrough in               the theory of decision making under uncertainty.  The                           contribution of this project comes from developing an                           alternative theory that is more plausible and might receive more                empirical support than the Bayesian theory.  For example, one of                the paradoxes of Bayesian decision theory is that if two                        individuals attach different subjective probabilities to an                     observable event, then they both can gain by exchanging a bet on                the event at some odds, yet we observe little such betting in                   reality.  The project develops a rigorous explanation based on                  uncertainty aversion and inertia.  This explanation is                          generalized to explain the absence of some markets for insurance                and forward contracts.                                                                                                                                          Even if the investigator fails to develop a completely                          satisfactory alternative theory of decision making under                        uncertainty, the project will provide new insights into such                    important questions as:  Why do strikes occur?  Why are wages                   downwardly rigid?  Why are contracts so simplified that the                     parties to the contract forego mutually beneficial gains?  Why                  are security prices so volatile?  Why do businesses use                         apparently inefficient routines such as keeping advertising                     expenditures a constant proportion of sales?
{'FirstName': 'Truman', 'LastName': 'Bewley', 'PI_MID_INIT': 'F', 'PI_SUFX_NAME': None, 'PI_FULL_NAME': 'Truman F Bewley', 'EmailAddress': 'truman.bewley@yale.edu', 'NSF_ID': '000090462', 'StartDate': '08/15/1988', 'EndDate': None, 'RoleCode': 'Principal Investigator'}
{'Name': 'Yale University', 'CityName': 'NEW HAVEN', 'ZipCode': '065113572', 'PhoneNumber': '2037854689', 'StreetAddress': '150 MUNSON ST', 'StreetAddress2': None, 'CountryName': 'United States', 'StateName': 'Connecticut', 'StateCode': 'CT', 'CONGRESSDISTRICT': '03', 'CONGRESS_DISTRICT_ORG': 'CT03', 'ORG_UEI_NUM': 'FL6GV84CKN57', 'ORG_LGL_BUS_NAME': 'YALE UNIV', 'ORG_PRNT_UEI_NUM': 'FL6GV84CKN57'}
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{'Code': '1320', 'Text': 'Economics'}
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