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increased at the expense of cash. The case is identical with open market policy: The central bank as one of the participants in the market sells bonds and withdraws the corresponding amount of cash from the market. We shall now consider cases where an additional demand for bonds comes from outside the market, that is, where the total of disposible funds is not constant any more.If now a buyer from outside the market (let us say from abroad) enters the market with the intention of buying a certain amount of bonds then he will have to offer a higher price than the ruling price. The new price p' will be just high enough to turn a sufficient number of bulls into bears so as to satisfy the additional demand of the outside buyer. The underlying assumption is that the people who expected prices between p and p' are now, when the price has become p', still sticking to their belief that prices will not maintain themselves at the new level but go back to the old level again. In other words the underlying beliefs are conservative. They involve a conviction that there exists a negative feedback mechanism. This, it appears, is a condition for stability. If instead of the conservative expectation there is a belief in a positive feedback then the price movement whether up or down would never come to a halt. The above argument was based on the extremely restrictive assumption that every member of the population of participants has the same amount of financial resources. If we drop this assumption we may at the same time also drop the implicit assumption that every participant expects one and only one definite price. This is, in fact, rather artificial. In reality he probably considers several alternative prices and perhaps attributes greater or lesser probability to one or the other alternative. If this variety of expectations has any practical consequence it will mean that he divides his resources according to the prices” on which he speculates", acting as a bull in relation to one part and as a bear in relation to the other, the proportions depending on the probability he attributes to the various expectations. In fact the participant may be regarded as a divided personality consisting of various parts each of which holds the same amount of wealth (a standard unit which may be determined by the minimum amount which can be traded). Again these expectations of the various "subpersonalities" may be ordered statistically and combined with the orderings of the other participants. In probabilistic terms this will mean a convolution of the various frequency distributions of the individuals' expectations. The resulting total frequency distribution for all participants together will show just how much funds are associated with each expected price. This is a cumulative frequency distribution as before but without the restrictive assumption of equal resources for each participant. The shift from bull to bear or vice versa may now take place within the resources of one and the same person or it may take place between persons. The distribution function just described may now be used to define and measure uncertainty. A measure of uncertainty in the group of participants in a market may be found in the variance of the price expectations. This cannot be observed directly but it will show itself through the strength of the price response which a certain additional offer or demand from outside (an exogenous disturbance) will produce. If expectations are closely concentrated a small change in the price will shift a large volume of financial resources from bull to bear or the other way round. If they are spread out widely a large change in price will be necessary in order to shift a modest amount of resources. It has to be noted, however, that the strength of reaction will also depend on whether the price initially is in the middle of the distribution (near the mode) or nearer to one of the tails. The peculiarity of the above definition of uncertainty is that it does not apply to an individual but to a group. Instead of being psychological it is a social concept. This also makes it more objective than the