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The individual measurement uncertainty factors are summarised, usually in tabular form, in the measurement uncertainty budget. Following the description of the measurement procedure and the laying down of the complete model equation, the knowledge of all input variables (values, distribution function , standard uncertainties ) can be ...
In such a configuration markets are said to be incomplete, and there are several ways to separate the budget set from the positive cone (sometimes called the free-lunch cone). This means that several price systems become admissible. At a Radner equilibrium like the Arrow–Debreu equilibrium under uncertainty, perfect consensual foresight is ...
In practice, there will be many situations where the probabilities are unknown, and one operates under uncertainty. In economics, Knightian uncertainty or ambiguity may occur. Thus, one must make assumptions about the probabilities, but the expected values of various decisions can be very sensitive to the assumptions.
For example, in an early study subjects said they would be indifferent between receiving $15 immediately or $30 after 3 months, $60 after 1 year, or $100 after 3 years. These indifferences reflect annual discount rates that declined from 277% to 139% to 63% as delays got longer. [ 6 ]
For example, politicians or managers may have more incentive to avoid the appearance of a total loss. In practice, there is considerable ambiguity and uncertainty in such cases, and decisions may in retrospect appear irrational that were, at the time, reasonable to the economic actors involved and in the context of their incentives.
Former head of Atlanta Fed tells CFOs he would prepare ‘budget A’ and ‘budget B’ amid Trump uncertainty. Sheryl Estrada. January 30, 2025 at 7:29 AM.
Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade". [1] Its concern is thus the interrelation of financial variables, such as share prices, interest rates and exchange rates, as opposed to those concerning ...
For example, increasing infrastructure expenditure during a recession can create jobs, which can provide an economic boost and increase income tax revenue. Tax cuts without offsetting revenue ...