If you are one of those Austrian economists who believes in the all-importance of unquantifiable Knightian uncertainty, I hope your shelves are full of unread books (we now, by the way, have the means to make this otherwise murky concept operational). Otherwise you are livin' a dirty, stinkin' lie. Karmic retribution will be swift and, yes, certain.
Personally, I tend to read books soon after buying them, therefore my ratio of read/unread depends on how busy I am. Currently it's frightening to realise that my bookshelf reflects my ambition rather than my conquests. So according to Tyler I'm not "livin' a dirty, stinkin' lie", but oh how I wish I was...
Recently Tyler has provided more thoughts about how to make Knightian uncertainty operational, including:
- we should observe market participants investing more in opportunities for serendipitous discovery
- go out and hire some people on the basis of rumors
Michael Stastny chimes in with his thoughts on Knightian Uncertainty (including the marvellous Keynes quote), and his conclusion is pessimistic:
it's more philosophy than science. I have been intrigued with the idea for many years, and perhaps it is an unsolvable paradox unworthy of too much contemplation.
The key point about Knightian Uncertinaty is defining an information set: if you know the range of possible outcomes, basic risk is relevant. If the set is undefined, we're dealing with uncertainty. A few months ago I asked Tyler for an article he'd written and he replied to say that he wasn't aware of the citation. Within a couple of hours his co-author had emailed me, and Tyler, with the paper.
If your own CV isn't a complete dataset, we really do live in a world of Knightian Uncertainty!!
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