Area B: Implications

Uncertainty in Markets and Strategic Interactions

The interaction of uncertainty and dynamics has new implications for markets and other economic environments. While Knightian uncertainty has been explored in depth for the natural starting point of financial markets (and is being explored further in Bielefeld’s CRC 1283), in this RTG, we plan to focus on other economic environments and markets that are no less important for society. In the light of recent pandemic and immigration experiences, a market of particular interest is the labor market. Within the RTG, we therefore plan to investigate network formation (B1) and frictions (B2) in labor markets under uncertainty. Innovation not only creates economic growth but also plays a key role for labor market dynamics. In research topic B3, we hence investigate the role of innovation in industrial organization exhibiting complex dynamics such as aggregate fluctuations. Finally, in research topic B4, we investigate behavior in general dynamic games under Knightian uncertainty, and apply the obtained results to repeated games such as dynamic oligopoly.