Probability, Risk, and Uncertainty

Let’s define these terms. The Chicago economist Frank Knight wrote about risk and uncertainty in 1921 (see here), the two sides of the probability coin. In brief, risk is “quantifiable” — think of a casino game like roulette, where you can calculate the odds of a bet before each spin. Uncertainty, by contrast, is impossible to quantify ex ante. Think of a “Black Swan” affair — an unpredictable event like the possibility of a nuclear war. See also the materials below:

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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2 Responses to Probability, Risk, and Uncertainty

  1. Craig says:

    An article related to this from seven years ago….

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