Area C: Applications

Consequences of Uncertainty for Policy and Welfare

The implications of acknowledging Knightian uncertainty in policy advice and governance are obviously substantial. Starting with the observation that Knightian uncertainty is usually taken to imply that decision makers deviate from subjective expected utility, let alone expected utility, the decision patterns of all agents may change drastically, implying that all policy advice and governance decisions need to be adapted when Knightian dynamics are recognized. Within the RTG, we intend to study the implications of Knightian dynamics for policy advice and governance with respect to five currently hotly debated topics: epidemics (C1), trust in economic policy (C2), capacity adjustment (C3), pollution (C4), and insurance (C5).