Editing Uncertainty (section)

=== Knightian uncertainty ===
In economics, in 1921 [[Frank Knight]] distinguished uncertainty from risk with uncertainty being lack of knowledge which is immeasurable and impossible to calculate. Because of the absence of clearly defined statistics in most economic decisions where people face uncertainty, he believed that we cannot measure probabilities in such cases; this is now referred to as [[Knightian uncertainty]].<ref name=":0">{{Cite book |last=Knight |first=Frank H. |url=http://worldcat.org/oclc/449946611 |title=Risk, uncertainty and profit |date=2009 |publisher=Kessinger Publishing |oclc=449946611}}</ref>

{{blockquote|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.|author=[[Frank Knight]] (1885–1972)|source=''Risk, Uncertainty, and Profit'' (1921), [[University of Chicago]].<ref>{{cite book |last=Knight |first=F. H. |year=1921 |title=Risk, Uncertainty, and Profit |location=Boston |publisher=Hart, Schaffner & Marx }}</ref>}}

{{Cquote|There is a fundamental distinction between the reward for taking a known risk and that for assuming a risk whose value itself is not known. It is so fundamental, indeed, that … a known risk will not lead to any reward or special payment at all.|author=Frank Knight}}
Knight pointed out that the unfavorable outcome of known risks can be insured during the decision-making process because it has a clearly defined expected probability distribution. Unknown risks have no known expected probability distribution, which can lead to extremely risky company decisions.

Other taxonomies of uncertainties and decisions include a broader sense of uncertainty and how it should be approached from an ethics perspective:<ref name="embo1">{{cite journal |vauthors=Tannert C, Elvers HD, Jandrig B |title=The ethics of uncertainty. In the light of possible dangers, research becomes a moral duty. |journal=[[EMBO Rep.]] |volume=8 |issue=10 |pages=892–6 |year=2007 |pmid=17906667 |doi= 10.1038/sj.embor.7401072 |pmc=2002561}}</ref>

[[File:Uncertainty.svg|thumb|left|550px|A taxonomy of uncertainty]]
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{{Quote box
 |width=33%
 |quote=There are some things that you know to be true, and others that you know to be false; yet, despite this extensive knowledge that you have, there remain many things whose truth or falsity is not known to you. We say that you are uncertain about them. You are uncertain, to varying degrees, about everything in the future; much of the past is hidden from you; and there is a lot of the present about which you do not have full information. Uncertainty is everywhere and you cannot escape from it.
 |salign=right
 |source=[[Dennis Lindley]], ''Understanding Uncertainty'' (2006)
}}