Black Swans and unknown unknowns: financial markets and their interaction with the macroeconomy in the presence of unanticipated contingencies

This project will examine the role of unforeseen contingencies, often described as black swans or unknown unknowns, as a source of macroeconomic and financial instability. The problems of making decisions while taking account of the fact that some consequences of those decisions cannot be foreseen will be analysed using recent developments in the theory of unawareness and choice under uncertainty. The results will be used to propose approaches to financial regulation that would improve robustness to unforeseen contingencies such as those that gave rise to the Global Financial Crisis in 2008.