Search under the Knightian Uncertainty

Kiyohiko G. Nishimura and Hiroyuki Ozaki
Additional contact information
Kiyohiko G. Nishimura: Faculty of Economics, University of Tokyo
Hiroyuki Ozaki: Faculty of Economics, Tohoku University

No CIRJE-F-112, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: Suppose that "uncertainty" about labor market conditions has increased. Does this change induce an unemployed worker to search longer, or shorter? This paper shows that the answer is drastically different depending on whether an increase in "uncertainty" is an increase in risk or that in true uncertainty in the sense of Frank Knight. We show in a general framework that, while an increase in risk (the mean-preserving spread of the wage distribution that the worker thinks she faces) increases the reservation wage, an increase in the Knightian uncertainty (a decrease in her confidence about the wage distribution) reduces it.

Pages: 41 pages
Date: 2001-04
New Economics Papers: this item is included in nep-evo
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.cirje.e.u-tokyo.ac.jp/research/dp/2001/2001cf112.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2001cf112

Access Statistics for this paper

More papers in CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo Contact information at EDIRC.
Bibliographic data for series maintained by CIRJE administrative office ().