Risk aversion is one of the most commonly cited properties of human decision making (e.g., Kahneman & Tversky, 1979). This finding is at odds with traditional expected value theory, but not with more recent theories of rational choice (e.g., von Neumann & Morgenstern, 1944). Since Bernoulli?s...

When a central bank operates with multiple, non-nested models of the economy, generally no single policy rule will be optimal across within alternate models. In this context, Levin and Williams (2003) introduce the notion of fault tolerance of policy rules, that is, the performance of policy...