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Jul 03

Uncertainty Which Should be Faced Entrepreneur by Frank H. Knight

education entrepreneurEconomist Frank H. Knight wrote a book titled “Risk Uncertainty and Profit” which is based on his dissertation at Columbia University. In his book, detailing the differences Knight economic risks and uncertainties.

In his book, he classifies three types of uncertainty:

1. Risks:

Risks that can be measured statistically (such as the probability of taking a red ball from a bag in which there are 5 red balls and 5 white balls)

2. Ambiguity:

It is difficult to measure statistically (such as the probability of taking a red ball from a container in which there are 5 red balls and white balls, but the number is not known).

3. Uncertainty true or Knight Uncertainty:

Uncertainty of this kind is impossible statistically estimated or predicted. For example, the probability of a red ball from a container that the number of red balls and an unknown number of other colored balls are also not known.