Risk, Uncertainty and Profit

Risk, Uncertainty and Profit

by Frank H. Knight
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Overview

Risk, Uncertainty and Profit by Frank H. Knight

One of the twentieth century's most influential economics texts, Risk, Uncertainty and Profit provided the theoretical basis of the entrepreneurial American economy during the post-industrial era. This revolutionary work taught the world how to systematically distinguish between risk (randomness with knowable probabilities), and uncertainty (randomness with unknowable probabilities), in order to accurately and properly ascertain a venture's potential profitability.
Author Frank H. Knight's methodology served as the foundation of the Chicago School of Economics, maintaining that competition in a free market economy is the best method for achieving economic health. In this 1921 book, Knight explains why perfect competition would not necessarily eliminate profits, because of "uncertainty," rather than "risk." He contends that even in long-run equilibrium, entrepreneurs would earn profits as a return for their toleration of uncertainty. Knight's reasoning remains valid in the twenty-first century, and his definitions of risk and uncertainty continue to be taught in modern economics classes.
Sociologist Edward Shils declared Risk, Uncertainty and Profit "a brilliant book," noting its interest not only to economists but also to social philosophers, sociologists, game theorists, and other specialists in social science.

Product Details

ISBN-13: 9780486147932
Publisher: Dover Publications
Publication date: 02/10/2012
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 448
Sales rank: 1,182,402
File size: 913 KB

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Risk, Uncertainty and Profit 3 out of 5 based on 0 ratings. 2 reviews.
Anonymous More than 1 year ago
I gave up before page 10!
Florida_author More than 1 year ago
From one of the most influential American economists of the "Chicago School" of economics, this important work discusses the distinction between "risk" (randomness with knowable probabilities) and "uncertainty" (randomness with unknowable probabilities), and sets forth the role of the entrepreneur in a distinctive theory of profit. For any student of economics or the history of economics, this work has been established as a classic in the field and, indeed, is a must read.