We develop a stochastic differential game of capitalism to analyze the role of uncertainty. In the deterministic game, the firm's rent is completely taxed away and the firm stops investing completely. In the stochastic game, the government does not tax the firm's rent completely. The firm posts...

The role of information in economic dynamics is examined. A misconception that the removal of uncertainty always brings additional stability to an existing equilibrium is clarified. It is shown that the relation between information and equilibrium stability is not monotonic. Removing information...