J.M. Keynes and F.H. Knight: How to Deal with Risk, Probability and Uncertainty

Yasuhiro Sakai

No 15, Discussion Papers CRR Discussion Paper Series A: General from Shiga University, Faculty of Economics,Center for Risk Research

Abstract: The purpose of this paper is to discuss and compare two giants in the history of economic thought, J.M. Keynes and F.H. Knight, with special reference to risk, probability, and uncertainty. It is in 1921 that both of them published apparently published similar books on the economics of risk and uncertainty. While Knight's contribution on risk and uncertainty is now well recognized, Keynes's accomplishments on probability and uncertainty have been rather ignored in the shadow of his most famous book The General Theory of Employment, Interest and Money (1936). This paper aims to focus on his earlier yet equally important book A Treatise on Probability (1921), and shed a new light on his outstanding ideas and everlasting influences on his later work including The General Theory. It is really interesting to see that Keynes's concept of probability and uncertainty can be well compared to Knight's distinction between a measurable risk and a non-measurable uncertainty.

Keywords: Keynes; Knight; risk; probability; uncertainty (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-03
New Economics Papers: this item is included in nep-his, nep-hpe, nep-pr~, nep-pke and nep-upt
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Citations: View citations in EconPapers (1)

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