30 Ways to Be an Economist is INET's grantee interview series - INET grantees talk about how they do their work, and how they came to be doing it. This week: Scott Condie - Modeling Asset Markets when Knowledge is Ambiguous
When you flip a coin, you expect heads and tails to show up with a 50% chance each. But what if all you knew was that heads and tails each have a chance of at least 25%? That's how Scott Condie captures Knightian uncertainty in asset markets. He models investors who act on basis of ambiguous knowledge, with the result that asset prices fail to reflect all private information. This is financial market modeling beyond the efficient market hypothesis - this is new economic thinking.