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In chapter 6, Guarantee at last? (May 26 - June 1), it becomes clear that even though the Austrian parliament passed a law authorizing the government to guarantee Credit Anstalt’s deposits, the struggle is far from over. It is difficult to get information from Credit Anstalt and nervousness about Germany and reparations grows as the Austrian crisis is also developing into a currency crisis. International bankers set up an International Creditors Committee, while the BIS and the Bank of England insist on controllers being associated with the Credit Anstalt and the Austrian National Bank (ANB). Norman confesses to have difficulty separating cause and effect and he grows impatient with the BIS and the ANB.
In chapter 7, Releasing the BIS credit (May 29 - June 5), the BIS credit of 150 million schilling is released to the ANB as a moratorium is averted and a guarantee. Meantime, the issue of an Austrian government loan, re-emerges and it becomes clear that the French may not be able to or wanting to take the lead in organizing the loan. In Basel, the BIS is getting ready for the upcoming board and governors’ meeting, where the decision about another credit to the ANB will have to be discussed. Rodd prepares several notes and a plan for the meeting.
In chapter 3, preparing for crisis, the narrative begins. It is told mainly chronologically and this chapter deals with the period between May 11 and May 19, but only after a brief focus on January 1931 where Harry Siepmann on the basis of the socalled Bagehot model considers what to do in case of a major financial crisis in Europe. The Bagehot model for a lender of last resort and its inadequacy in the face of an international crisis, is a theme that goes through the book’s narrative. On May 11 the Credit Anstalt failure is made known and the central bankers get ready to make sense of the information they get from Austria and elsewhere. The BIS sends Francis Rodd to Vienna and the chapter follows him closely as he communicates his findings back to the BIS and Bank of England. In a world where debt is abundant and credit scarce, Rodd presents a plan to the upcoming BIS board meeting.
Chapter 4, Moratorium or guarantee (May 25 - May 27), traces the communications between central and private bankers as they realize that a moratorium may be on its way. Central and private bankers increasingly try to avoid a moratorium and Norman uses his network to get the international creditors to organize themselves. There is an increasing sense of urgency and uncertainty, but it seems that the BIS and central banks are successful in averting a moratorium and getting a guarantee instead. There are still many unknowns, however, and the occasional conflict in the epistemic community also appears.
In chapter 2, central bankers and their world, I first present the most important protagonists and a few other actors. They include Montagu Norman and Harry Siepmann of Bank of England, George L. Harrison of the Federal Reserve Bank of New York and Francis Rodd of the Bank for International Settlements. I discuss their background and worldview as they were headed into the 1931 crisis. Having presented these main actors and a few others, I proceed to present their world and how they saw it in 1930 and early 1931. The world was already in the midst of the great depression and private bankers as well as central bankers and other decision-makers were aware that they were dealing with crisis and radical uncertainty that might bring about the end of the gold standard and capitalism. I discuss the actors view of the "present world depression" and how they viewed the gold standard and their options as they got ready for trying to save the world from economic disaster.
Recently, scholars have advanced an ideal of the entrepreneurial state in which industrial policy is pursued in a mission-directed manner. Crucially, this perspective does not merely call for the heavier use of industrial policy, but envisions the state as a central focal point, mobilising society around the pursuit of a common mission. Using the historical example of East Asia's developmental state, which closely resembles its contemporary variant, I demonstrate that mission-directionality – should it be consistently applied – tends towards the pursuit of a singular overarching mission, and could require the use of authoritarian and disciplinary mechanisms to sustain mission focus in an environment of uncertainty. In turn, this potential risk arises because mission-directionality seeks to transcend the otherwise directionless nature of market-based and democratic decision-making through the use of bureaucratic discretion, to align the behaviour of social actors in a cohesive and directional manner.
The performance and confidence in fault detection and diagnostic systems can be undermined by data pipelines that feature multiple compounding sources of uncertainty. These issues further inhibit the deployment of data-based analytics in industry, where variable data quality and lack of confidence in model outputs are already barriers to their adoption. The methodology proposed in this paper supports trustworthy data pipeline design and leverages knowledge gained from one fully-observed data pipeline to a similar, under-observed case. The transfer of uncertainties provides insight into uncertainty drivers without repeating the computational or cost overhead of fully redesigning the pipeline. A SHAP-based human-readable explainable AI (XAI) framework was used to rank and explain the impact of each choice in a data pipeline, allowing the decoupling of positive and negative performance drivers to facilitate the successful selection of highly-performing pipelines. This empirical approach is demonstrated in bearing fault classification case studies using well-understood open-source data.
Threat perception in international relations has received much academic attention and continues to do so. Other contributions to this special section on how leaders feel security dangers or perceive threats with radical uncertainty are closely intertwined with this article’s focus on threats that are vague and not immediately perceptible. Humans possess a capacity for thinking about and imagining the future known as prospection. Faced with threatening futures, can governments prepare their civil servants to systematically manage uncertainties and anticipate dangers? Drawing on empirical data from interviews with foresight practitioners in the United Kingdom and Singapore, this article examines how governments are nudging civil servants to deploy futures techniques as part of threat perception.
Risk is a central concept in modern regulatory studies. In Chapter 2, the general idea of ’risk’ is introduced. The chapter helps readers grasp its scientific and practical relevance for regulation. The chapter also offers an overview of the importance of risk in scholarly work and policy-making. The chapter emphasizes the extensive and diverse nature of risk studies across different academic disciplines including ’technical’ quantitative methods and sociological critique. It explains how risk identification, risk assessment, and risk management are conventionally understood and highlights their shortcomings and complexities. Additionally, it discusses the trend of ’riskification’ – the tendency to frame a growing number of issues in the language of risk.
Facing the challenges of aging populations, new technologies provide a potential solution to meeting the increasing needs associated with demographic changes by increasing productivity in healthcare production. However, decision-makers require evidence of whether the adoption of new technologies improves the efficiency of healthcare resource use. Cost-effectiveness analysis (CEA) is a methodology for evaluating new technologies by comparing a new intervention with the current intervention (or mix of different interventions) used for treating the same patient group. This chapter explores the theoretical foundations of CEA and the conditions required for CEA to inform decision-makers about the efficiency of implementing the new intervention are identified. The implications of using CEA as a basis for decision-making in the absence of these theoretical conditions are discussed, and solutions to addressing the efficiency problems under real-world conditions are derived. Where practical considerations limit the ability of decision-makers to apply these solutions, an alternate practical approach, focused on efficiency improvements as opposed to efficiency maximization, is presented.
This is a reprinting of Einstein, Podolsky and Tolman’s 1931 letter to the editor of Physical Review. In this letter, the authors demonstrate that the principles of quantum mechanics give rise to an uncertainty in the description of past events which is analogous to the uncertainty quantum mechanics assigns to the prediction of future events.
During the Cold War, logical rationality – consistency axioms, subjective expected utility maximization, Bayesian probability updating – became the bedrock of economics and other social sciences. In the 1970s, logical rationality underwent attack by the heuristics-and-biases program, which interpreted the theory as a universal norm of how individuals should make decisions, although such an interpretation is absent in von Neumann and Morgenstern’s foundational work and dismissed by Savage. Deviations in people’s judgments from the theory were thought to reveal stable cognitive biases, which were in turn thought to underlie social problems, justifying governmental paternalism. In the 1990s, the ecological rationality program entered the field, based on the work of Simon. It moves beyond the narrow bounds of logical rationality and analyzes how individuals and institutions make decisions under uncertainty and intractability. This broader view has shown that many supposed cognitive biases are marks of intelligence rather than irrationality, and that heuristics are indispensable guides in a world of uncertainty. The passionate debate between the three research programs became known as the rationality wars. I provide a brief account from the ‘frontline’ and show how the parties understood in strikingly different ways what the war entailed.
This final chapter demonstrates how the catastrophe (CAT) models described in previous chapters can be used as inputs for CAT risk management. CAT model outputs, which can translate into actionable strategies, are risk metrics such as the average annual loss, exceedance probability curves, and values at risk (as defined in Chapter 3). Practical applications include risk transfer via insurance and CAT bonds, as well as risk reduction, consisting of reducing exposure, hazard, or vulnerability. The forecasting of perils (such as tropical cyclones and earthquakes) is explored, as well as strategies of decision-making under uncertainty. The overarching concept of risk governance, which includes risk assessment, management, and communication between various stakeholders, is illustrated with the case study of seismic risk at geothermal plants. This scenario exemplifies how CAT modelling is central in the trade-off between energy security and public safety and how large uncertainties impact risk perceptions and decisions.
Important parts of the Earth’s climate and environment can change in ways that are self-reinforcing, sudden, and irreversible. The risks of such changes are under-researched, under-reported in what is communicated by scientists to governments, and underestimated. In the most authoritative science assessments, the most important policy question of all – whether the climate will be stable at low degrees of warming – is hardly even raised.
The robots of tomorrow should be endowed with the ability to adapt to drastic and unpredicted changes in their environment and interactions with humans. Such adaptations, however, cannot be boundless: the robot must stay trustworthy. So, the adaptations should not be just a recovery into a degraded functionality. Instead, they must be true adaptations: the robot must change its behaviour while maintaining or even increasing its expected performance and staying at least as safe and robust as before. The RoboSAPIENS project will focus on autonomous robotic software adaptations and will lay the foundations for ensuring that they are carried out in an intrinsically trustworthy, safe and efficient manner, thereby reconciling open-ended self-adaptation with safety by design. RoboSAPIENS will transform these foundations into ‘first time right’-design tools and platforms and will validate and demonstrate them.
This paper distinguishes news about short-lived events from news about changes in longer term prospects using surveys of expectations. Employing a multivariate GARCH-in-Mean model for the US, the paper illustrates how the different types of news influence business cycle dynamics. The influence of transitory output shocks can be relatively large on impact but gradually diminishes over two to three years. Permanent shocks drive the business cycle, generating immediate stock price reactions and gradually building output effects, although they have more immediate output effects during recessions through the uncertainties they create. Markedly different macroeconomic dynamics are found if these explicitly identified types of news or uncertainty feedbacks are omitted from the analysis.
This study was conducted to investigate individuals’ perceptions of media messages about the COVID-19 pandemic and the effect of these messages on their fear and uncertainty.
Methods
Data for this descriptive correlational study were collected between October and November 2020. A total of 653 individuals living in Turkey provided online survey data by completing a Personal Information Form, the Pandemic Uncertainty Scale, and the COVID-19 Pandemic Fear Scale.
Results
The mean age of the participants was 52.1 ± 12.6, and 79.9% were female. It was found that 27.9% of participants “always” followed COVID-19 news in the media, and 41.3% “often” followed COVID-19-related news. Participants’ COVID-19 fear (24.46 ± 8.07) and uncertainty (55.35 ± 8.63) scores were moderate and correlated.
Conclusions
Level of trust in mass media was found to affect uncertainty about the pandemic. As level of trust in mass media increased, uncertainty about the pandemic decreased. Appropriate measures must be identified and adopted for effective and safe media use in situations posing massive and significant health threats such as COVID-19.
Attitudes toward risk and ambiguity significantly influence how individuals assess and value rewards. This fMRI study examines the reward valuation process under conditions of uncertainty and investigates the associated neural mechanisms in individuals who engage in nonsuicidal self-injury (NSSI) as a coping mechanism for psychological pain.
Methods
The study involved 44 unmedicated individuals who reported five or more NSSI episodes in the past year, along with 42 age-, sex-, handedness-, IQ-, and socioeconomic status-matched controls. During the fMRI scans, all participants were presented with decision-making scenarios involving uncertainty, both in terms of risk (known probabilities) and ambiguity (unknown probabilities).
Results
In the NSSI group, aversive attitudes toward ambiguity were correlated with increased emotion reactivity and greater method versatility. Whole-brain analysis revealed notable group-by-condition interactions in the right middle cingulate cortex and left hippocampus. Specifically, the NSSI group showed decreased neural activation under ambiguity v. risk compared to the control group. Moreover, reduced hippocampal activation under ambiguity in the NSSI group was associated with increased emotion regulation problems.
Conclusions
This study presents the first evidence of reduced brain activity in specific regions during value-based decision-making under conditions of ambiguity in individuals with NSSI. These findings have important clinical implications, particularly concerning emotion dysregulation in this population. This study indicates the need for interventions that support and guide individuals with NSSI to promote adaptive decision-making in the face of ambiguous uncertainty.
Drylands provide multiple essential services to human society, and dryland vegetation is one of the foundations of these services. There is a paradox, however, in the vegetation productivity–precipitation relationship in drylands. Although water is the most limiting resource in these systems, a strong relationship between precipitation and productivity does not always occur. Such a paradox affects our understanding of dryland vegetation dynamics and hinders our capacity to predict dryland vegetation responses under future climates. In this perspective, we examine the possible causes of the dryland precipitation–productivity paradox. We argue that the underlying reasons depend on the location and scale of the study. Sometimes multiple factors may interact, resulting in a less significant relationship between vegetation growth and water availability. This means that when we observe a poor correlation between vegetation growth and water availability, there are potentially missing sources of water input or a lack of consideration of other important processes. The paradox could also be related to the inaccurate measurement of vegetation productivity and water availability indicators. Incorporating these complexities into predictive models will help us better understand the complex relationship between water availability and dryland ecosystem processes and improve our ability to predict how these ecosystems will respond to the multiple facets of climate change.
This editorial describes the Cass Review findings and the extraordinary challenge we all face in managing uncertainty amid a toxic and highly polarised debate. Children and young people will only get the best care if patients and professionals join forces to seek answers collaboratively and respectfully.