Lecturer: Professor Frank Riedel (University of Bielefeld, Germany)
Topic: Knightian uncertainty plays a fundamental role in recent years, both in economic policy as in economic theory. Knightian uncertainty refers here to situations in which the probabilities of relevant outcomes are not known. Such situations occur frequently in economics when, e.g. quantities such as the probability of default of a country or the outlook of a newly founded company have to be assessed. In these lectures, we are going to discuss the decision theoretic foundations for economic analysis of Knightian uncertainty as opposed to pure risk models and highlight several interesting applications of these models in economics and finance.