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Two-Armed Restless Bandits with Imperfect Information : Stochastic Control and Indexability

Fryer, Roland G. <Jr.> - 2013

We present a two-armed bandit model of decision making under uncertainty where the expected return to investing in the "risky arm'' increases when choosing that arm and decreases when choosing the "safe'' arm. These dynamics are natural in applications such as human capital development, job...

Persistent link: https://www.econbiz.de/10013082147

Efficient Unemployment Insurance

Acemoglu, Daron; Shimer, Robert - 2021

This paper constructs a tractable general equilibrium model of search with risk-aversion. An increase in risk … hazard: insured workers seek high wage jobs with high unemployment risk. An economy with risk-neutral workers achieves … maximal output without any UI. In contrast, in an economy with risk-averse workers, a positive level of UI maximizes output …

Persistent link: https://www.econbiz.de/10013234055

Working Through the Distribution : Money in the Short and Long Run

Rocheteau, Guillaume - 2015

to include employment risk and show that repeated money injections can raise output and welfare when unemployment is high …

Persistent link: https://www.econbiz.de/10013010714

How General are Risk Preferences? Choices Under Uncertainty in Different Domains

Einav, Liran - 2015

willingness to bear risk, relative to his peers, across different contexts. We do so by examining the same individuals' decisions …-general component of risk preferences …

Persistent link: https://www.econbiz.de/10013039164

Organizational Decision Making Under Uncertainty Shocks

Ballesteros, Luis - 2018

markets, such as natural disasters, terrorist attacks, and financial crises—as a problem of risk management. This is …

Persistent link: https://www.econbiz.de/10012912518

Monetary Policy in an Uncertain Environment

Feldstein, Martin S. - 2021

This paper discusses the nature of the uncertainty faced by central banks and considers three approaches to dealing with uncertainty(1) formal optimization models and robust rules based on such models; (2) informal rules like the Taylor rule and inflation targeting; and (3) a case by case...

Persistent link: https://www.econbiz.de/10013236687

The Effect of Uncertainty on Investment : Evidence from Texas Oil Drilling

Kellogg, Ryan - 2010

Despite widespread application of real options theory in the literature, the extent to which firms actually delay irreversible investments following an increase in the uncertainty of their environment is not empirically well-known. This paper estimates firms' responsiveness to changes in...

Persistent link: https://www.econbiz.de/10013135876

Economic Analysis of Risk and Uncertainty Induced by Health Shocks : A Review and Extension

Philipson, Tomas J. - 2013

We review and extend the economic analysis of risk and uncertainty as it relates to behavior mitigating health shocks … for risk-sharing in health by pooling the health care spending risk. In a sense, medical innovation involves a current …

Persistent link: https://www.econbiz.de/10013082433

Uncertainty as Commitment

Nosal, Jaromir - 2013

Time-inconsistency of no-bailout policies can create incentives for banks to take excessive risks and generate endogenous crises when the government cannot commit. However, at the outbreak of financial problems, usually the government is uncertain about their nature, and hence it may delay...

Persistent link: https://www.econbiz.de/10013087435

Dynamic Incentive Contracts Under Parameter Uncertainty

Prat, Julien - 2014

We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed...

Persistent link: https://www.econbiz.de/10013068839