Introduction: Understanding Uncertainty

Uncertainty is a term all of us use in everyday life. Its meaning is informally motivated by an appeal to intuition and our experience. In the recent period it has been often used by economists. When analyzing macroeconomic problems we cannot treat uncertainty as a primitive (generic) notion that does not require defining. Without any definition we are exposed to confusion resulting from different understanding and dependency on the analytical context. Hence, when defining uncertainty it is essential to characterize its nature - to determine whether it is the uncertainty resulting from natural variability and randomness, or the epistemic uncertainty associated with insufficient knowledge of the investigated phenomenon. (fragment of text)Uncertainty is a term all of us use in everyday life. Its meaning is informally motivated by an appeal to intuition and our experience. In the recent period it has been often used by economists. When analyzing macroeconomic problems we cannot treat uncertainty as a primitive (generic) notion that does not require defining. Without any definition we are exposed to confusion resulting from different understanding and dependency on the analytical context. Hence, when defining uncertainty it is essential to characterize its nature - to determine whether it is the uncertainty resulting from natural variability and randomness, or the epistemic uncertainty associated with insufficient knowledge of the investigated phenomenon. (fragment of text