Speaker

Ross Emmett, Professor of Economic Thought, School of Civic and Economic Thought and Leadership, and Director, Center for the Study of Economic Liberty, Arizona State University

Abstract

Frank Knight’s Risk, Uncertainty and Profit was published in 1921, and has remained in publication ever since. After a brief biographical sketch of the author’s life, the paper turns to the two aspects of the book that kept it alive in the economics profession long after other doctoral dissertations published under the auspices of the Hart, Schaffner and Marx essay competition were forgotten. The first is Knight’s re-interpretation of price theory. It is Knight’s price theory that led Lionel Robbins to reprint Risk, Uncertainty and Profit from 1933 to the 1960s, and it is the price theory sections of the book that graduate students in the University of Chicago’s Department of Economics turned to for background on their professor’s ideas. The second is his use of uncertainty to elucidate a theory of imperfect competition in which uncertainty both leads to a variety of contractual relations that firm owners may make with suppliers, insurance providers, laborers, and hired managers, and brings increased uncertainty through principal/agent and incentive incompatibility problems. At the same, time, the dynamism of imperfect competition creates potential for innovation and new firm creation, which in turn challenges the existing social organization of economic activity.

Related Works

"The Writing and Reception of Risk, Uncertainty and Profit", forthcoming in the Cambridge Journal of Economics.

"What Can We Learn about Frank Knight's Economic Theory from the Prefaces to the Reprints of Risk, Uncertainty and Profit?", forthcoming in Research in the History of Economic Thought and Methodology.

"Uncertainty and the Social Organization of Economic Activity", forthcoming in the Journal of Institutional Economics.

A workshop to commemorate the centenary of publication of Frank Knight’s "Risk, Uncertainty, and Profit" and John Maynard Keynes’ “A Treatise on Probability”

This workshop is organised by the University of Oxford and supported by The Alan Turing Institute. For further details and regular updates, please visit the official event website

About the event
The year 2021 marks the centenary of two monumental publications in economics and probability theory, namely Risk, Uncertainty, and Profit by Frank Hyneman Knight and A Treatise on Probability by John Maynard Keynes.

In Risk, Uncertainty, and Profit, Knight put forward the vital difference between risk, where empirical evaluation of unknown outcomes can still be applicable, and uncertainty, where no quantified measurement is valid but subjective estimate. In A Treatise on Probability, Keynes argued that the concept of probability should be about the logical implication from premises to hypotheses, in contrast to the classical quantified perspective of probability.

The fundamental uncertainty proposed in both works has then deeply influenced the development of economic and probability theory in the past century and it still resonates with our lives today, considering the ups and downs that the world economy is experiencing.

This workshop is a tribute to their invaluable legacy.

Speakers:
Professor Dr Francesca Biagini, Ludwig Maximilian University of Munich
Professor Sara Biagini, LUISS Guido Carli
Professor Simon Blackburn, Trinity College, Cambridge
Professor Dr Paul Embrechts, ETH Zurich
Professor Itzhak Gilboa, HEC Paris
Professor Lars Hansen, University of Chicago
Professor Fabio Maccheroni, Bocconi University
Professor Massimo Marinacci, Bocconi University
Professor Marcel Nutz, Columbia University
Professor Shige Peng, Shandong University
Professor Dr Frank Riedel, Bielefeld University
Professor Ross Emmett, Arizona State University
Organizers:
Sam Cohen, Lars Hansen, Tomasz R. Bielecki, Igor Cialenco, Mike Tehranchi and Haoyang Cao