New York, NY, November 17, 2010 --(PR.com
)-- The Institute for New Economic Thinking (INET), launched with a $50 million pledge from George Soros to promote changes in economic theory and practice through research grants, Task Force groups, academic partnerships, and conferences, announced that it has selected Jayant Ganguli of Cambridge University and Scott Condie of Brigham Young University to be awarded a project grant through the Institute’s Inaugural Grant Program to examine the informational inefficiency of market prices in the presence of Knightian uncertainty or ambiguity. The grant program, along with other INET initiatives, was created in direct response to arguably the worst economic crisis in world history, and has been designed to encourage and support new economic thinking. Starting in 2011, INET will conduct two grant cycles annually.
The project addresses the fact that asset markets are continually beset by new information, which includes information about counterparty, sovereign, market and other risks. The quality of this information and hence its utility can vary widely both across asset classes and across times. Professors Ganguli and Condie plan to use INET’s funding to explore the implications this inefficiency has for financial market phenomena such as volatility and price swings, trading volume, contagion, and the welfare of market participants.
“Knightian uncertainty in economics signifies risk that is immeasurable and not possible to calculate,” said Dr. Robert Johnson, Executive Director of INET. “Better understanding its implications on financial market behavior and its connection to the recent financial crisis can help the finance and economics communities to deal with future situations involving such uncertainty.”
Scott Condie is an Assistant Professor of Economics at Brigham Young University. His research is on asset pricing with heterogeneous investors. Jayant Ganguli is a University Lecturer in Economics at the University of Cambridge. His research is on economic implications of Knightian uncertainty.
“This project will study the observable implications of information that is not incorporated into market prices because it is uncertain in the Knightian sense,” said Jayant Ganguli, a University Lecturer in the Department of Economics at Cambridge University. “The aspect of Knightian uncertainty we focus on is the ambiguity of the information about relative likelihood of events, building on the insights of Daniel Ellsberg, who emphatically suggested that such ambiguity has behavioral implications.”
“INET’s support of this research enables us to conduct the theoretical and computational work necessary to complete this research, as well as providing the opportunity to involve graduate and undergraduate student research assistants in the development of this project,” added Scott Condie, an Assistant Professor in the Department of Economics at Brigham Young University.
INET’s Inaugural Grant Program has been designed to harness the new economic thinking we recognize as crucial to effecting change. The program was launched this summer and received more than 500 applications from around the world and has selected 31 initiatives to be awarded grants totaling $7 million. INET's Grant Program will continue with two similar grant cycles annually, the next one commencing in the spring of 2011.
For further details regarding INET’s Grant Program or additional projects and people to be awarded grants please visit the Institute’s website.
About the Institute for New Economic Thinking:
Launched in October 2009 with a $50 million commitment from George Soros and driven by the global financial crisis, the Institute for New Economic Thinking (INET) is dedicated to empowering and supporting the next generation of economists and scholars in related fields through research grants, Task Force groups, academic partnerships, and conferences. INET embraces the professional responsibility to think beyond current paradigms. Ultimately, INET is committed to broadening and accelerating the development of innovative thinking that can lead to insights into and solutions for the great challenges of the 21st century and return economics to its core mission of guiding and protecting society. For more information please visit http://www.ineteconomics.org/