The analytics of uncertainty and information

by Jack Hirshleifer

"Economists have always recognized that human endeavors are constrained by our limited and uncertain knowledge, but only recently has an accepted theory of uncertainty and information evolved. This theory has turned out to have surprisingly practical applications: for example in analyzing stockmarket returns, in evaluating accident prevention measures, and in assessing patent and copyright laws. This book presents these intellectual advances in a readable form for the first time. It unifies many important but partial results into a satisfying single picture, making it clear how the economics of uncertainty and information generalizes and extends standard economic analysis." "Part I of the volume covers the economics of uncertainty: how each person adapts to a given fixed state of knowledge by making an optimal choice among the immediate "terminal" actions available. These choices in turn determine the overall market equilibrium reflecting the social distribution of risk bearing. In Par