Insights / Video

Confronting Risk and Ambiguity in Macroeconomics and Finance

For decades or centuries, economists and decision theorists have struggled to use probability to understand how individuals respond to risk and ambiguity. When investors or consumers face a complex economic environment, it is challenging to represent the uncertainty they face with probability theory. At this Friedman Forum, Lars Peter Hansen, a leader in this field, demonstrates how to think about this problem—and why it matters.
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