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Clarifying Frank Knight's Discussion of the Meaning of Risk and Uncertainty

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  • Runde, Jochen

Abstract

Frank Knight's (1921) famous distinction between risk and uncertainty has entered the jargon of economics and decision theory. Yet it appears to have gone unnoticed that his formulation suffers from an elementary confusion. This note locates the source of the problem and proposes a reformulation that avoids it. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Runde, Jochen, 1998. "Clarifying Frank Knight's Discussion of the Meaning of Risk and Uncertainty," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 22(5), pages 539-546, September.
    • Handle: RePEc:oup:cambje:v:22:y:1998:i:5:p:539-46
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    Cited by:

    1. Fusari, Angelo, 2013. "Radical Uncertainty, Dynamic Competition and a Model of the Business Cycle," MPRA Paper 74015, University Library of Munich, Germany, revised Mar 2013.
    2. Feduzi, Alberto, 2007. "On the relationship between Keynes's conception of evidential weight and the Ellsberg paradox," Journal of Economic Psychology, Elsevier, vol. 28(5), pages 545-565, October.
    3. Terje Aven, 2012. "Foundational Issues in Risk Assessment and Risk Management," Risk Analysis, John Wiley & Sons, vol. 32(10), pages 1647-1656, October.
    4. Johann Peter Murmann & Deepak Sardana, 2013. "Successful entrepreneurs minimize risk," Australian Journal of Management, Australian School of Business, vol. 38(1), pages 191-215, April.
    5. Aven, Terje, 2012. "The risk concept—historical and recent development trends," Reliability Engineering and System Safety, Elsevier, vol. 99(C), pages 33-44.
    6. Feduzi, Alberto & Runde, Jochen, 2011. "The uncertain foundations of the welfare state," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 613-627.
    7. Michel S. Zouboulakis, 2022. "Elements of Risk in Classical Political Economy and Marx," Bulletin of Political Economy, Bulletin of Political Economy, vol. 16(2), pages 147-159, December.
    8. Len Fisher & Anders Sandberg, 2022. "A Safe Governance Space for Humanity: Necessary Conditions for the Governance of Global Catastrophic Risks," Global Policy, London School of Economics and Political Science, vol. 13(5), pages 792-807, November.
    9. Mario Le Glatin & Pascal Le Masson & Benoit Weil, 2018. "Can organisational ambidexterity kill innovation? A case for non-expected utility decision making," Post-Print hal-01808566, HAL.
    10. Takanori Adachi & Takanori Hisada, 2017. "Gender differences in entrepreneurship and intrapreneurship: an empirical analysis," Small Business Economics, Springer, vol. 48(3), pages 447-486, March.
    11. Pau Sendra-Pons & Sara Belarbi-Muñoz & Dolores Garzón & Alicia Mas-Tur, 2022. "Cross-country differences in drivers of female necessity entrepreneurship," Service Business, Springer;Pan-Pacific Business Association, vol. 16(4), pages 971-989, December.
    12. Haley, Usha C. V., 2003. "Assessing and controlling business risks in China," Journal of International Management, Elsevier, vol. 9(3), pages 237-252.
    13. Tihana Škrinjarić, 2023. "Credit-to-GDP Gap Estimates in Real Time: A Stable Indicator for Macroprudential Policy Making in Croatia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(3), pages 582-614, September.
    14. Catherine Cleophas & Daniel Kadatz & Sebastian Vock, 2017. "Resilient revenue management: a literature survey of recent theoretical advances," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(5), pages 483-498, October.
    15. Grechuk, Bogdan & Zabarankin, Michael, 2014. "Risk averse decision making under catastrophic risk," European Journal of Operational Research, Elsevier, vol. 239(1), pages 166-176.
    16. Roger Fernandez-Urbano & Nevena Kulic, 2020. "Requiem for a Dream: Perceived Economic Conditions and Subjective Well-Being in Times of Prosperity and Economic Crisis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 151(3), pages 793-813, October.
    17. Lewis, Paul & Runde, Jochen, 2007. "Subjectivism, social structure and the possibility of socio-economic order: The case of Ludwig Lachmann," Journal of Economic Behavior & Organization, Elsevier, vol. 62(2), pages 167-186, February.
    18. Derbyshire, James & Morgan, Jamie, 2022. "Is seeking certainty in climate sensitivity measures counterproductive in the context of climate emergency? The case for scenario planning," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    19. Straathof, Bas, 2002. "Micro-uncertainty and growth," Research Memorandum 001, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    20. John Finch & Nicola Dinnei, 2001. "Capturing Knightian Advantages of Large Business Organisations Through Group Decision-making Processes," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(3), pages 379-403.

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