On the Use of Market-Based Probabilities for Policy Decisions
11 Pages Posted: 15 Dec 2015
Date Written: 2015-12-14
This paper seeks to delimit conditions so that market-based probabilities provide all the information the policymaker needs to arrive at the best possible decision. Although there are practical considerations regarding how to derive market-based probabilities from financial prices, the author confines the discussion to a theoretical analysis that assumes no impediment to obtaining the market-based probabilities.
Keywords: Policy, Market-based probabilities, Policymaker
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