Fundamental Uncertainty and Ambiguity

This paper is an attempt to go beyond dichotomic taxonomies of the concept of uncertainty. It argues for the need to distinguish between at least two types of situation that have been opposed to what neoclassical economics deals with under the rubric of uncertainty or risk. These situations are associated with the concepts of, respectively, ambiguity and fundamental uncertainty. It is also argued that Keynes refers both to situations of ambiguity and of fundamental uncertainty in his several writings, without explicitly distinguishing between them. Finally, the paper also discusses whether ambiguity and fundamental uncertainty come in (ordinal) degrees.

[1]  R. Hogarth,et al.  Decision Making under Ambiguity , 1986 .

[2]  L. J. Savage,et al.  The Foundations of Statistics , 1955 .

[3]  J. Keynes.  The General Theory of Employment , 1937 .

[4]  David Kelsey.  Maxmin Expected Utility and Weight of Evidence , 1994 .

[5]  F. J. C. Carvalho.  Keynes on Probability, Uncertainty, and Decision Making , 1988 .

[6]  O. Hamouda,et al.  Uncertainty and Economic Analysis: Some Remarks , 1988 .

[7]  Richard N. Langlois,et al.  FRANK KNIGHT ON RISK, UNCERTAINTY, AND THE FIRM: A NEW INTERPRETATION , 1993 .

[8]  M. Machina.  Choice under Uncertainty: Problems Solved and Unsolved , 1987 .

[9]  R. J. Rotheim.  Keynes and the Language of Probability and Uncertainty , 1988 .

[10]  P. Anand.  THE NATURE OF RATIONAL CHOICE AND THE FOUNDATIONS OF STATISTICS , 1991 .

[11]  R. Bausor,et al.  THE EPISTEMOLOGICAL FOUNDATIONS OF THE GENERAL-THEORY , 1988 .

[12]  L. Hoogduin.  On the difference between the keynesian, knightian and the ‘classical’ analysis of uncertainty and the development of a more general monetary theory , 1987 .

[13]  I. Gilboa.  Expected utility with purely subjective non-additive probabilities , 1987 .

[14]  R. Pindyck.  Irreversibility, Uncertainty, and Investment , 1990 .

[15]  J. Keynes,et al.  The Collected Writings of John Maynard Keynes: Surplus, Relief and Commodity Policy , 1971 .

[16]  A. Dutt,et al.  Keynes's third alternative? : the neo-Ricardian Keynesians and the post Keynesians , 1990 .

[17]  F. Knight.  The economic nature of the firm: From Risk, Uncertainty, and Profit , 2009 .

[18]  Eduardo S. Schwartz,et al.  Investment Under Uncertainty. , 1994 .

[19]  J. Keynes,et al.  The General Theory of Employment, Interest and Money. , 1936 .

[20]  J. Harsanyi.  Rational behavior and bargaining equilibrium in games and social situations: Frontmatter , 1977 .

[21]  D. Ellsberg.  Decision, probability, and utility: Risk, ambiguity, and the Savage axioms , 1961 .

[22]  Craig R. Fox,et al.  Ambiguity Aversion and Comparative Ignorance , 1995 .

[23]  T. Bewley,et al.  Market Innovation and Entrepreneurship: A Knightian View , 1989 .

[24]  Louise Davidson.  Financial Markets, Investment and Employment , 1990 .

[25]  Richard N. Langlois,et al.  Risk and uncertainty , 1994 .

[26]  R. Bausor.  The rational-expectations hypothesis and the epistemics of time , 1983 .

[27]  I. Gilboa,et al.  Maxmin Expected Utility with Non-Unique Prior , 1989 .

[28]  Jonathan Baron,et al.  Ambiguity and rationality , 1988 .

[29]  D. Schmeidler.  Subjective Probability and Expected Utility without Additivity , 1989 .

[30]  H. Minsky.  Stabilizing an Unstable Economy , 1986 .

[31]  Anna-leila Williams.  Uncertainty and decision making , 2018, Integrating Health Humanities, Social Science, and Clinical Care.

[32]  David Dequech.  Asset Choice, Liquidity Preference, and Rationality under Uncertainty , 2000 .

[33]  Alan Coddington,et al.  Deficient Foresight: A Troublesome Theme in Keynesian Economics , 1982 .

[34]  Jochen Runde.  Keynesian uncertainty and the instability of beliefs , 1991 .

[35]  Peter Gärdenfors,et al.  Unreliable probabilities, risk taking and decision making , 1988 .

[36]  6. THE NATURE OF EXPECTATION AND UNCERTAINTY , 1966 .

[37]  G. Dosi,et al.  Substantive and procedural uncertainty , 1991 .

[38]  Karen S. Cook,et al.  The Limits of Rationality , 1992 .

[39]  Sujoy Mukerji,et al.  Understanding the nonadditive probability decision model , 1997 .

[40]  L. Cohen,et al.  Twelve Questions about Keynes's Concept of Weight , 1986, The British Journal for the Philosophy of Science.

[41]  Jochen Runde.  Keynesian Uncertainty and the Weight of Arguments , 1990, Economics and Philosophy.

[42]  Robert A. Jones,et al.  Flexibility and Uncertainty , 1984 .

[43]  J. Quiggin,et al.  Theories of Choice Under Ignorance and Uncertainty , 1992 .

[44]  Tony Lawson,et al.  Probability and Uncertainty in Economic Analysis , 1988 .

[45]  David Dequech.  Confidence and action: a comment on Barbalet , 2000 .

[46]  M. Lavoie.  Foundations of Post-Keynesian Economic Analysis , 1993 .

[47]  Edi Karni,et al.  Utility theory with uncertainty , 1991 .

[48]  G. Shackle.  The years of high theory , 1967 .

[49]  T. Lawson.  Uncertainty and Economic Analysis , 1985 .

[50]  C. Freeman.  Economics of Industrial Innovation , 1975 .

[51]  M. E. Brady,et al.  J. M. Keynes's Theoretical Approach to Decision-making Under Conditions of Risk and Uncertainty , 1993, The British Journal for the Philosophy of Science.