We survey literature on ambiguity with an emphasis on recent applications in
macroeconomics and finance. Like risk, ambiguity leads to cautious behavior and …

The standard theory of decision making under uncertainty advises the decision maker to
form a statistical model linking outcomes to decisions and then to choose the optimal …

The introduction of the precious metals for the purposes of money may with truth be
considered as one of the most important steps towards the improvement of commerce, and …

This review considers the design of macroeconomic policies in the face of uncertainty. In
recent years, several economists have advocated that, when policy makers are uncertain …

The prominent but unproven intuition that preference heterogeneity reduces redistribution in
a standard optimal tax model is shown to hold under the plausible condition that the …

This paper studies the design of optimal fiscal policy when a government that fully trusts the
probability model of government expenditures faces a fearful public that forms pessimistic …

We consider a model of cost-based procurement in which the principal faces Knightian
uncertainty about the agent's preferences for cost reduction. We show that a particularly …

The Mirrleesian model of income taxation restricts attention to simple allocation mechanism
with no strategic interdependence, ie, the optimal labor supply of any one individual does …

Preferences over consumption and leisure play no role in the standard optimal tax model,
which attributes all variation in earnings to differences in income-earning ability. We show …

This paper analyzes how consumer uncertainty affects optimal fiscal policy in the Lucas and
Stokey (1983) framework. The consumers, lacking confidence in their knowledge of the …