Working paper N. 777 Febbraio 2018
Marcello Basili
DEPS, USiena
Carlo Zappia
DEPS, USiena
Abstract
This paper presents an intuitive way to represent Keynes’s notion of long-term expectations and its implications for decision-making, using the so-called ε-contamination approach. Further to a suggestion by Ellsberg, a coherent Keynesian expectational function for decisions under uncertainty is derived. The paper draws on the similarities between the analyses of Keynes and Ellsberg and contends that much of current decision theory under ambiguity follows in Keynes’s footsteps
Keywords
uncertainty, expectations, Keynes, consensus distribution, epsilon-contamination
Jel Codes
B26, D81
