In 2014, Fabrice Brégier, then chief operating officer of Airbus, called for the European Central Bank to intervene as the strength of the euro was “crazy.” He wanted them to push it down against the dollar by 10% from an “excessive” $1.35 to between $1.20 and $1.25. We learned in Chapter 14 how a strong currency makes it harder for domestic manufacturers to export goods, so we can understand why a European executive trying to sell commercial airplanes might worry that a strong euro was making his job harder. And it is a fact that in 2014, Airbus was registering disappointing sales compared to its rival across the Atlantic, Boeing. But why would it be “crazy” for the euro to be worth $1.35, and yet normal and acceptable for the euro to be worth 10% less than that? And how did Fabrice Brégier expect the European Central Bank to adjust the euro’s value, when the euro is under a floating, rather than a fixed, exchange rate regime?

This chapter first describes the generic situations of risk, subjective uncertainty, ambiguity, and true uncertainty. It then outlines the main decision theory under risk in neoclassical economics, expected utility theory (EU). We outline EU’s axiomatic structure and highlight the independence axiom that has often been rejected by the evidence, as exemplified by the Allais paradox. The two main drawbacks of EU are that it does not allow for individuals who (i) derive utility from changes in outcomes relative to a reference point (although this is consistent with it's underlying axioms) and (i) weight probabilities in a nonlinear manner. Other violations of EU are also considered; these include description invariance and preference reversals.

In January 2017, just three days after taking office, President Donald Trump withdrew the United States from the Trans-Pacific Partnership, or TPP. This trade agreement involving about a dozen Pacific Rim countries would have reduced trade barriers and established rules governing trade in the region. “We’re going to stop the ridiculous trade deals that have taken … companies out of our country,” he stated. Trump had consistently argued that trade agreements such as the North American Free Trade Agreement (NAFTA) with Canada and Mexico were “a bad deal” for US workers and unfair to American business, allowing other countries “to take advantage of us.”

In times of turmoil, one would think that a stable, or relatively stable, exchange rate would be a boon to policymakers, soothing the anxieties of international investors. However, keeping the value of the currency stable against a foreign currency such as the US dollar, when buffeted by shocks, entails sometimes painful tradeoffs.

This chapter defines and describes trauma, adversity and trauma-informed practice. We explore how trauma impacts children and young people and how this may influence their engagement with education. A summary about how a student may present when experiencing trauma is provided. As teachers often hear about and address trauma and adversity faced by children, the concepts of compassion fatigue and vicarious trauma are also briefly explored. The chapter ends with examples of ways in which teachers can create trauma-informed classrooms and support and promote trauma-informed policies and practices in schools.

There is a parable about an entrepreneur who invents an amazing machine. Wheat, soybeans, lumber, and oil are fed into one end of the contraption. As if by magic, smartphones, coffee, and tea, and all manner of clothing and apparel come out the other end. The inventor is praised as a genius – until further investigation reveals that the wheat and the other inputs were being secretly shipped to other countries in exchange for the electronics and apparel that later emerged. When this news is made public, the inventor is denounced as an unpatriotic fraud who is destroying jobs.

In January 2017, just three days after taking office, President Donald Trump withdrew the United States from the Trans-Pacific Partnership, or TPP. This trade agreement involving about a dozen Pacific Rim countries would have reduced trade barriers and established rules governing trade in the region. “We’re going to stop the ridiculous trade deals that have taken … companies out of our country,” he stated. Trump had consistently argued that trade agreements such as the North American Free Trade Agreement (NAFTA) with Canada and Mexico were “a bad deal” for US workers and unfair to American business, allowing other countries “to take advantage of us.”

The automobile industry has long captured America’s imagination. Not only are cars an iconic part of national culture, but they are also essential for moving around – unless you happen to live in New York City.

The auto industry is dominated by a handful of large firms. Toyota, Volkswagen, Daimler, General Motors (GM), Ford, Honda, Fiat Chrysler, Nissan, and BMW are the global sales leaders. Each firm produces a wide array of vehicles: small and large sedans, minivans, SUVs, and pickups. And then there are specialty producers such as Tesla and Lamborghini.

After decades of roaring growth, the “East Asian Miracle” – as touted in a 1993 book published by the World Bank – seemed to be in full swing. Yet a mere four years later, the region was engulfed in chaos. What became known as the Asian Financial Crisis unfolded in July 1997. As foreign exchange reserves were depleted, the Bank of Thailand was forced to let the Thai baht float freely. The currency immediately depreciated by 21%. By January 1998, the baht was 54% weaker against the dollar than it had been six months earlier. The turmoil was not restricted to Thailand; Singapore, Malaysia, Indonesia, and the Philippines also experienced stresses on their balance of payments as capital flows reversed course, with net flowing out rather than in. In November 1997, the Bank of Korea floated its currency after years of keeping its currency, the won, tightly managed against the dollar. By January 1998, the won had fallen in value by 39%. Figure 18.1 tells the story graphically.

In June of 2016, voters in the United Kingdom narrowly approved a referendum on leaving the European Union (EU), a common market wherein labor, capital, and goods and services are free to move between countries without impediment. The vote in favor of Britain’s exit – or “Brexit” – set in motion a process by which the country would leave the EU within two years.

In this chapter, compared to Chapter 8 we assume that data or expert knowledge can tell us not only something about the possible values of the problem’s parameters but also about their relative likelihood, that is, the probability distribution.