If you experience any technical difficulties with this video or would like to make an accessibility-related request, please send a message to [email protected]. For decades or centuries, economists and decision theorists have struggled to use probability to understand how individuals respond to risk and ambiguity. When investors or consumers face a complex economic environment, it is challenging to represent the uncertainty they face with probability theory. At this Friedman Forum, Lars Peter Hansen, a leader in this field, demonstrates how to think about this problem—and why it matters.