Critical Finance Review > Vol 5 > Issue 1

Uncertainty and Valuations: A Comment

Lubos Pastor, University of Chicago Booth School of Business, USA, , Pietro Veronesi, University of Chicago Booth School of Business, USA,
Suggested Citation
Lubos Pastor and Pietro Veronesi (2016), "Uncertainty and Valuations: A Comment", Critical Finance Review: Vol. 5: No. 1, pp 129-134.

Publication Date: 12 May 2016
© 2016 L. Pastor and P. Veronesi
UncertaintyConvexityStock valuationBubble


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In this article:
1. Two Kinds of Convexity 
2.The Puzzling Empirical Result 
3. What If Return Volatility Were Used As Proxy for Uncertainty? 
4. The Technology “Bubble” 
5. Conclusion 


Cremers and Yan (2016) aim to provide “an additional litmus test for the uncertainty-convexity argument in Pástor and Veronesi (2003).” We challenge this view, as well as the authors’ related thoughts on the technology “bubble” of the late 1990s. Nonetheless, we agree with Cremers and Yan that our profession needs to think harder about the measurement of parameter uncertainty.