Measuring economic uncertainty is crucial for understanding investment decisions by individuals and firms. Macroeconomists increasingly rely on survey data on subjective expectations. An innovative approach to measure aggregate uncertainty exploits the rounding patterns in individuals' responses...

In this paper we perform a meta-analysis on empirical estimates of the impact between investment and uncertainty. Since the outcomes of primary studies are largely incomparable with respect to the magnitude of the effect, our analysis focuses on the direction and statistical significance of the...

We study the stability of the no-arbitrage property under model uncertainty. We measure model uncertainty with the total variation distance of underlying probability distributions. We show that sufficiently small changes of the underlying probability distribution preserve the no-arbitrage...

This paper tests the theory of mixed strategy equilibrium using Maradona's penalty kicks during his lifetime professional career. The results are remarkably consistent with equilibrium play in every respect: (i) Maradona's scoring probabilities are statistically identical across strategies; (ii)...

Most decisions in life are gambles. Should I speed up or slow down as I approach the yellow traffic light ahead? Should I invest in the stock market or in treasury bills? Should I undergo surgery or radiation therapy to treat my tumor? From mundane choices rendered with scarcely a moment's...

The efficiency of institutions, understood in the sense of constraint optimization, does not make much sense when discussing the New Institutional Economics (NIE), i. e., under conditions in which institutions matter. For such a world one has to use non-optimizing methods to assess the economic...

A long tradition suggests a fundamental distinction between situations of risk, where true objective probabilities are known, and unmeasurable uncertainties where no such probabilities are given. This distinction can be captured in a Bayesian model where uncertainty is represented by the agent's...

A long tradition suggests a fundamental distinction between situations of risk, where true objective probabilities are known, and unmeasurable uncertainties where no such probabilities are given. This distinction can be captured in a Bayesian model where uncertainty is represented by the agent's...

We use spline interpolation to approximate the subjective cumulative distribution function of an economic agent over the future realization of a continuous (possibly censored) random variable. The method proposed exploits information collected using a small number of probability questions on...

What would you do if you were invited to play a game where you were given $25 and allowed to place bets for 30 minutes on a coin that you were told was biased to come up heads 60% of the time? This is exactly what we did, gathering 61 young, quantitatively trained men and women to play this...