Econometrica: Jan 1976, Volume 44, Issue 1
Asymmetric Policymaker Utility Functions and Optimal Policy under Uncertainty
Roger N. WaudWhen the policymaker's utility function is asymmetric, structural shifts in uncertainty have quite different implications for optimal policymaker behavior under uncertainty depending on the source of those shifts. Changes in uncertainty about exogenous variables do not lead to changes in the policymaker's bias. However, this is not necessarily the case when there is a change in uncertainty about policy response parameters. By contrast, symmetric policymaker utility functions do not imply these distinctions.
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