Projects in this program will develop tools for the modelling of uncertainty in the absence of probabilities and with imperfect knowledge about possible events. It will also formalise and assess the precautionary principle for the sustainable management of complex systems.
Key Projects
- Unforeseen Contingencies
- State-Contingent Production
1) Unforeseen Contingencies
Objective
Develop models of choice incorporating unforeseen contingencies
Progress so far
Substantial progress has been made in relation to the general representation of unforeseen contingencies. More significantly, a general formulation of the precautionary principle has been put forward, based on the idea that, in situations involving incomplete understanding of a problem, formal decision-making procedures tend to be biased in favour of options where the risks are least well understood.
2) State-Contingent Production
Objective
Analyze uncertainty using state-contingent models of choice and production
Progress so far
Areas of application have included drought policy, agency theory and finance theory. The current focus is on empirical estimation and on the integration of production and finance theory.