The Risk-Neutral Equivalent Pricing of Model-Uncertainty
The paper introduces a Risk-Neutral Equivalent (RNE) approach to asset pricing under model-risk uncertainty. This method aims to move asset pricing closer to practice by focusing on bottom-up analysis, showing that viable pricing has an intuitive 'price-of-risk' and dynamic. It disentangles the effects of ex-ante bias and risk-pricing without the usual joint hypothesis problem.