Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/118596
Authors: 
Falkinger, Josef
Year of Publication: 
2015
Series/Report no.: 
Economics Discussion Papers 2015-60
Abstract: 
Economic uncertainty has to do with the consequences of actions under different circumstances. This raises two questions: First, how sensitive are the outcomes of actions to variations in the environment? Second, how clearly can we distinguish between environments? Robustness comes at the price of targeting actions less narrowly to specific conditions, so we lose gains from specialization. Need for robustness comes from our limited knowledge. Rational dealing with uncertainty requires to accord the degree of specialization to the reliability of knowledge about the relevant circumstances. In practical terms, under such an approach acting under uncertainty is related to guidelines for strategic thinking: Focus on priorities on a broader scale; the most refined set of actions is not always the best one.
Subjects: 
limited knowledge
robustness
reliable information
risk and uncertainty
crisis tolerance
JEL: 
D80
D81
D83
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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