Steve Boese shares Learn a New Word Thursday: Knightian Uncertainty

Steve Boese Steve Boese, Worldwide FOT

Welcome back to the latest installment of ‘Learn a new word Thursday’ where I share with you some small, but hopefully interesting and relevant word or concept that since it is new to me, must be new to (many of) you as well.

Submitted for your consideration today’s word/concept: Knightian uncertainty.

From your pals at Wikipedia:

In economics, Knightian uncertainty is risk that is immeasurable, not possible to calculate.

Knightian uncertainty is named after University of Chicago economist Frank Knight (1885–1972), who distinguished risk and uncertainty in his work Risk, Uncertainty, and Profit:

“Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated…. The essential fact is that ‘risk’ means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating…. It will appear that a measurable uncertainty, or ‘risk’ proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all.”

Read the whole post over at Steve Boese’s HR Technology Journal (an FOT contributor blog).

Steve Boese

Steve Boese is fondly known to many as the HR Technology blogger. By day, he is the Co-Chair of Human Resource Executive’s HR Technology Conference. He is also a former Director of Talent Management Strategy at Oracle and an HR Technology instructor. Steve can also be found hosting the HR Happy Hour Show and Podcast … you know, where a bunch of HR pros get together and call in to talk about HR stuff. Sounds like an SNL skit, we know. But when you have Dave Ulrich, the grandfather of HR as show guests, well, I guess you’re doing something right.  Talk to Steve via emailLinkedInTwitter or Facebook.