Economics of Pessimism and Optimism Theory of Knightian Uncertainty
This is the first book to investigate the pessimistic and optimistic perceptions of the future and their economic consequences, based on sound mathematical foundations. The book focuses on fundamental uncertainty (Knightian uncertainty), where the probabi
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Economics of Pessimism and Optimism Theory of Knightian Uncertainty and Its Applications
Economics of Pessimism and Optimism
Kiyohiko G. Nishimura Hiroyuki Ozaki •
Economics of Pessimism and Optimism Theory of Knightian Uncertainty and Its Applications
123
Kiyohiko G. Nishimura National Graduate Institute for Policy Studies (GRIPS) Minato-ku, Tokyo Japan
ISBN 978-4-431-55901-6 DOI 10.1007/978-4-431-55903-0
Hiroyuki Ozaki Faculty of Economics Keio University Minato-ku, Tokyo Japan
ISBN 978-4-431-55903-0
(eBook)
Library of Congress Control Number: 2017948201 © Springer Japan KK 2017 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer Japan KK The registered company address is: Chiyoda First Bldg. East, 3-8-1 Nishi-Kanda, Chiyoda-ku, Tokyo 101-0065, Japan
Preface
Real life is full of surprises. Not only do ordinary people in the street face unexpected events, but experts in financial districts and policy-makers in capitals around the globe are often also caught off guard by “once-in-a-century” unanticipated events. One such surprise event was the sudden collapse of European interbank markets on August 9, 2007, which then sparked the global financial crisis. The ramifications of this massive event, largely unexpected, shaped the financial landscape for the entire tenure of one of the coauthors (Nishimura) as Deputy Governor of the Bank of Japan. Faced with the real possibility of surprise events, human emotions often swing between optimism and pessimism. Just before the global financial crisis, financial markets around the world showed great optimism that “this time” was different and we would see sustained prosperity. Immediately after the crisis was perceived as being real, the same financial markets displayed extreme pessimism leading to failures
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