Lars Peter Hansen

Lars Peter Hansen is a professor at the University of Chicago and received the 2013 Nobel Prize in Economics along with Eugene Fama and Robert Shiller. He is best known for developing the Generalized Method of Moments (GMM), a statistical method that allows economists to test economic models without fully specifying the distribution of shocks. GMM is now a standard tool in testing asset pricing models, consumption dynamics, and macro-financial relationships. Hansen has also contributed significantly to research on uncertainty, ambiguity aversion, and robust decision-making under model uncertainty. His work with Thomas Sargent on robust control — how decision-makers should act when they are uncertain about the correct economic model, not just about parameter values within a known model — has been influential in both economic theory and financial risk management, providing a rigorous framework for making decisions under deep uncertainty that goes beyond standard expected utility maximization.