Policy uncertainty

[4] In addition, important pieces of environmental, energy, healthcare, and financial regulation were disputed in Congress and the wider political arena during these years.

The future path of government spending, potential bailouts, monetary policy by the European Central Bank have been widely speculated on, making for a highly uncertain business environment.

He argued that these situations, where decision making rules such as maximising expected utility can be applied, differ in a deep way from "uncertain" ones, where the outcomes were likewise random, but governed by an unknown probability model.

Even when government changes the rules in a way that seemingly strengthens private-property rights overall, the action's specific form may jeopardize particular types of investment, and apprehension about such a threat may paralyze investors in these areas.

In sum, heightened uncertainty in general — a perceived increase in the potential variance of all sorts of relevant government action — may deter investment even if expectations shift toward more secure private-property rights.