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Chaos Theory Versus Heisenberg's Uncertainty: Risk, Uncertainty and Economic Theory

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  • Elias L. Khalil

Abstract

The paper argues that there is a fundamental difference between the indeterminism of chaos theory and the indeterminism of quantum mechanics. The difference somewhat resembles Knight's distinction between risk and uncertainly. Theorists interested in going beyond equilibrium economics have failed to notice the difference. Therefore, they confuse between two kinds of economic change which involve indeterminism, viz. , nonlinear dynamics and technological/institutional development. They also regard the evolutionary paradigm as an alternative of the equilibrium one—whereas each deals with a different phenomenon.

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  • Elias L. Khalil, 1997. "Chaos Theory Versus Heisenberg's Uncertainty: Risk, Uncertainty and Economic Theory," The American Economist, Sage Publications, vol. 41(2), pages 27-40, October.
  • Handle: RePEc:sae:amerec:v:41:y:1997:i:2:p:27-40
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    File URL: http://aex.sagepub.com/content/41/2/27.abstract
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    Cited by:

    1. Madhu Acharyya & Chris Brady, 2014. "Designing an Enterprise Risk Management Curriculum for Business Studies: Insights From a Pilot Program," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 17(1), pages 113-136, March.
    2. Elias Khalil, 2000. "Survival of the Most Foolish of Fools: The Limits of Evolutionary Selection Theory," Journal of Bioeconomics, Springer, vol. 2(3), pages 203-220, October.

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