Measuring Radical Uncertainty in Economics: A Chance Novel?

La mesure de l’incertitude radicale en économie: un roman du hasard ?

Christian Walter ()

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Abstract: Radical uncertainty seems to be everywhere and causes specific difficulties in decision making. In the face of radical uncertainty, one may be somehow seduced by the sceptical position that rejects any idea of modelling and measurement. The alternative is that the use of exploratory narratives is useful, but without probabilistic models. However, it is difficult to win the day of accurate forecasting in a radical uncertainty regime, only with narratives as a credible alternative. Hence, I do present in this paper, a family of models, named HPE models, that bring together the use of narratives for the management of radical uncertainty and probabilistic modelling for risk control. I describe the counterfactual and modal features of these models and suggest that HPE models are like what the literature has termed chance novels.

Date: 2024-02-05
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Published in Revue Française d'Economie, 2024, XXXVIII (3), pp.3-30. ⟨10.3917/rfe.233.0003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04560259

DOI: 10.3917/rfe.233.0003

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