Mondi in collisione: Incertezza e rischio in tempi difficili

Translated title of the contribution: Worlds in collision: Uncertainty and risk in hard times

Peter J. Katzenstein*, Stephen Nelson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

In this paper we revive the analytical distinction between risky choice settings, in which we have reliable probability distributions based on past observations, and choices made in the face of uncertainty, in which probabilities are either unknown or unknowable. Many political economists assume that we live only in a world of calculable risk. We contest that view in this article. Political and economic agents make many of their most important decisions under conditions of uncertainty, or in ambiguous situations that mix risk and uncertainty. Absent reliable estimates of calculable probabilities, social conventions or technologies, such as risk management models, are indispensible for agents to function in a world in which they must make potentially enormously rewarding or costly choices. We demonstrate the empirical payoffs of a analytical approach that makes room for both risk and uncertainty by drawing on the writings of a financial market insider, George Soros, and by analyzing decision making in the US Federal Reserve.

Translated title of the contributionWorlds in collision: Uncertainty and risk in hard times
Original languageItalian
Pages (from-to)369-393
Number of pages25
JournalStato e Mercato
Issue number3
StatePublished - Dec 1 2011

ASJC Scopus subject areas

  • Sociology and Political Science

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