Economists, mathematicians, psychologists and other researchers have developed theories about how people react when faced with uncertainty, i.e., something that they do not understand completely and also may be in conflict with what they believe to be the case. Consider, for example, the situation where you have no news and do not know the probability for rain to occur today. Should you go out without your umbrella and risk getting wet? An ambiguous individual will react by taking into account the worst possible state that can occur, i.e., what will happen if she goes out without an umbrella. In economics and finance a key issue is how individuals will negotiate the terms of a contact in ambiguous situations. They would like to write incentive compatible and efficient contacts. Can this be done? Can ambiguity prevent an individual from being cheated in a contract, making it beneficial? What about a government or firm that makes decisions about the future of the economy or the firm? Should the decision-maker adopt risky policies that could lead to bankruptcy or should the decision-maker hedge against the worst possible state that can occur to avoid bankruptcy?

Related to such questions, there is a new stream of thought in asymmetric information economies based on non-expected utility theory (ambiguity/robustness). When we deal with uncertainty, the choice of Expected Utility (EU) plays an important role. Even with the same primitives in an economy, if one computes a certain equilibrium concept with different Expected Utilities (which means a different functional form, as different expected utilities provide alternative functional forms) one will get different results. But then, which formulation of EU is better? Can one compare Expected Utilities, and on what criteria?

Such questions have led economists to adopt ideas from statistics/mathematics, e.g., robust optimization, robust control, robust contracts, robust implementation, ambiguity, etc. The objective of our conference is to bring together researchers on the above topics to find out what has been achieved, explore common grounds, see where the new path is leading us and perhaps raise further questions. The conference is being organized by Nicholas Yannelis, University of Iowa.