Purpose: This research explores how investment and central bankers cope with strategic uncertainty when they anticipate prices. The uncertainty originates from others' decisions and their consequences, and cannot be meaningfully reduced to risk. The authors postulate that, in order to cope with...

Behavioral economists have done a great service in connecting psychology and economics. Up to now, however, most have focused on cognitive illusions and anomalies, in order to prove the descriptive failure of neoclassical economic models. The key problems in the cognitive illusions literature...