What we are Certain about Uncertainty

THE ERC PROJECT OF MASSIMO MARINACCI WANTS TO PROPOSE SOPHISTICATED MODELS THAT ALLOW TO INTRODUCE THE CONCEPT OF UNCERTAINTY INTO ECONOMIC MODELS

Uncertainty is pervasive in our society – just think of financial crises, natural disasters, terrorist attacks. It differs from risk, that implies that one can estimate the probability that an event will occur. “The treatment of uncertainty in existing models is stylized”, says Massimo Marinacci (Department of Decision Sciences), Principal Investigator of the ERC-funded project Individual decisions and macroeconomic robustness (INDIMACRO), hosted by IGIER - Innocenzo Gasparini Institute for Economic Research.
 
“These models can hardly fit individual decision-making. They can be used to explain economic phenomena only under unrealistic assumptions about individual behavior, for instance about risk aversion. They eventually become straitjackets”. Marinacci’s project purports to design sophisticated models for the study of uncertainty, with applications mainly in Macroeconomics and Finance, and to create a unified Macro-Finance and Decision Theory framework for the study of model uncertainty.
 
This is Marinacci’s second ERC grant after Bounded rationality and social concerns in decision processes: theory, experiments, and applications which was funded in 2009. “The supranational character of the European Research Council is of special significance. It guarantees full transparency of the process and a better funding allocation. It also limits the dispersion of funds. The ERC has triggered a virtuous cycle. This is a meritocratic revolution”.

Read here the other articles on the ERC research projects:
The Dream Team of Research made in..ERC
University at the Time of Star Wars
The Culture That Influences Demography
For a History of Inequality in Europe
Fostering Solidarity in Times of Migrations
A Theory of Games and Emotions
Why with Broadband We will have More Children
How to Communicate Climate Science
At the Birth of Maritime Insurance
Even Distorted Choices can be Rational
The Psychology of Economic Behavior
Great Expectations for Great Objectives
Putting a Halt to the Spread of Infections
Wellbeing and Fertility, a Two-Way Relationship
The Role of Financial Imperfections
The World Through the Lens of Power
The Selection of the Political Class
How to Evaluate Innovative Ideas
A Help for Those who make Predictions
When a Government is Guided by Values
 

 

by Claudio Todesco