Nicholas Mangee's How Novelty and Narratives Drive the Stock Market: Black Swans, Animal Spirits and Scapegoats is an important book. It gives a theory of uncertainty that completes a project begun by Keynes long before The General Theory and overthrows the standard approach to uncertainty in economics. Its study of narratives, multiple equilibria, and use of machine learning to extract the contents of narratives from financial reporting is certain to be of wide interest and is a real contribution to economics.

- George Akerlof, Nobel Laureate in Economics; co-author of Animal Spirits, Phishing for Fools, and Identity Economics

It is a fact of life that stock market returns, along with the innovations that frequently drive them, are the outcome of unrepeatable and unforeseeable changes — unforeseeable not in the same way as roulette outcomes, but as unknown even in terms of their probabilities. Nicholas Mangee’s Novelty-Narrative Hypothesis helps us understand how these unknown unknowns drive market outcomes. This book is a treasure trove of information and insights into the radical uncertainty that drives so much of our economic experiences. Economists, policy makers and market participants should take note.

- Dennis Snower, Economist, G20 Economic Policy Advisor and President of Global Solutions Initiative

In this important volume, Nicholas Mangee makes a substantial contribution to operationalizing the narrative approach to analyzing fundamental uncertainty as an ongoing feature of the stock market. Uncertainty prevents the definitive measurement of risk which underpins mainstream macro-finance models. But Mangee shows how the incidence of uncertainty, its causes in unforeseen events, and the way in which markets deal with it through narratives, can be analyzed and quantified. The dataset he has built up is a contribution in itself. This is a thoughtful, thoroughly-researched exploration of the narrative approach to embedding fundamental uncertainty in the core of economics and finance. It should be read attentively by theorists, policy-makers and financial practitioners alike.

- Sheila Dow, Economist, University of Stirling; author of Economic Methodology: An Inquiry

Attempts to escape from economists’ equilibrium trap have been hampered by their conceit of dividing expectations into ‘rational’ and ‘irrational’. Nicholas Mangee shows, and shows brilliantly, that in the face of inescapable uncertainty, rational decision-making is necessarily built on ‘novelty and narrative’, not mathematical probability.

- Lord Robert Skidelsky, Economic Historian, Warwick University; author of Keynes: The Return of the Master

To say that this book is timely is a massive understatement – current events will be dissected with great interest for the coming decade.

- Richard Friberg, Economist, Stockholm School of Economics; author of Managing Risk and Uncertainty: A Strategic Approach

This book develops a highly original approach, called the Novelty-Narrative Hypothesis, to empirical examination of stock market outcomes that would enable economists, policymakers, and market participants to better understand unforeseeable change and Knightian uncertainty. In doing so, Mangee’s book provides a hitherto unavailable set of tools for extracting information on historical events and narrative dynamics, which would be invaluable in academic research and teaching as well as in making practical policy and business decisions.

- Roman Frydman, Economist, New York University, co-author of Beyond Mechanical Markets: Asset Price Swings, Risk, and the Role of the State