In many countries, the monetary policy instrument remains unchanged for a long period and shows infrequent responses to exogenous shocks. The purpose of this paper is to provide a new explanation on why the central bank’s policy instrument remains so unchanged. In the following analysis, we explore how Knightian uncertainty affects optimal monetary policy. We apply the Choquet expected decision...

In many countries, the monetary policy instrument sometimes remains unchanged for a long period and shows infrequent responses to exogenous shocks. The purpose of this paper is to provide a new explanation on why the central bank’s policy instrument remains unchanged. In the following analysis, we explore how uncertainty on the private agents’ expectations affects robust optimal monetary policy...

This paper estimates a time-varying AR-GARCH model of inflation producing measures of inflation uncertainty for the euro area, and investigates the linkages between them in a VAR framework, also allowing for the possible impact of the policy regime change associated with the start of EMU in 1999. The main findings are as follows. Steady-state inflation and inflation uncertainty have declined st...

In this study, we investigate the relationship between uncertainty and trust in exogenous shifts in modes of social exchange (i.e., those that are not initiated by the individuals in a given exchange system). We explore how transitions from a high uncertainty environment (reciprocal exchange) to lower-uncertainty environments (nonbinding or binding negotiated exchange) affect the level of trust...

This paper estimates a time-varying AR-GARCH model of inflation producing measures of inflation uncertainty for the euro area, and investigates the linkages between them in a VAR framework, also allowing for the possible impact of the policy regime change associated with the start of EMU in 1999. The main findings are as follows. Steady-state inflation and inflation uncertainty have declined st...

The uncertainty which has characterised the financial crisis has encouraged renewed attention to uncertainty in economics. Yet, not only is uncertainty seen as unpalatable in financial markets and economic life more generally, it also poses challenges for economists to the extent that uncertainty is absent from most of mainstream theory. The purpose of this paper is to consider the reasons for ...

U ncertainty is an amorphous concept. It refl ects uncertainty in the minds of consumers, managers, and policymakers about possible futures. It is also a broad concept, including uncertainty over the path of macro phenomena like GDP growth, micro phenomena like the growth rate of fi rms, and noneconomic events like war and climate change. In this essay, I address four questions about uncertaint...

We study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of conflict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of conflict is higher if power is more imbalanced. E...

Existing research has used real options theory to study corporate venture capital (CVC) investment, yet little work has empirically examined such investment in a comparative setting. In this paper, we begin to address this gap by investigating firms’ investment mode choice between CVC and acquisition, which are alternative modes for pursuing external business development and corporate growth. W...

Running title: Feature-based attention and pupil size 8 Corresponding Author: 9 Paola Binda, PhD 10 Universita’ di Pisa, Department of Translational Research on New Technologies in 11 Medicine and Surgery 12 via San Zeno 31, 56126 Pisa (Italy) 13 Office: +39-050-3153185 14 [email protected] 15 16 17 The authors declare no competing financial interests 18 19 Acknowledgments 20 This research was...