Online citations, reference lists, and bibliographies.
← Back to Search

Risk, Uncertainty And Profit

F. Knight

Save to my Library
Download PDF
Analyze on Scholarcy
In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets. To explain this seeming paradox, Knight uncovers the distinction between calculable risk and essentially unknowable uncertainty. Knight argued that risk stems from repeated events, which therefore allow probabilities to be calculated and factored into decisions, as for instance insurers do. Uncertainty however, stems from events that are unpredictable and as such cannot be prepared against. According to Knight, it is the interplay between risk and uncertainty on the one hand and competition between incumbent and new entrepreneurs that accounts for the enormous variation in profitability across firms and, for the same firms, over time. His insights on the sources of profit have been instrumental in shaping modern economic theory and to the development of a useful understanding of probability. This New Edition has been typeset with modern techniques and contains a newly compiled Index of important topics. It has been painstakingly proofread to ensure that it is free from errors and that the content is faithful to the original.

This paper is referenced by
Against the Grain: What Motivates Entrepreneurs to Locate in Pennsylvania's Non-Metropolitan Cities and Boroughs
Michael Fortunato (2009)
Antecedents of entrepreneurial orientation: A contingency approach
Laurent Josien (2008)
Earning from History?: Financial Markets and the Approach of World Wars
N. Ferguson (2008)
The role of measurement problems and monitoring in PES schemes
G. Meijerink (2008)
Follow me ... on the relationship between social media activities and market values in the German Bundesliga
Monika Frenger (2019)
The effect of future income uncertainty in savings decision
F. Gomes (2008)
Risk, Uncertainty, and Autonomy: Financial Market Constraints in Developing Nations
Layna Mosley (2008)
Strategic urban projects in Amsterdam and New York: incomplete contracts and good faith in different legal systems
M. Veen (2009)
Individuals and Opportunities
Nikolina Fuduric (2008)
Stumbling Blocks to Entrepreneurship in Low- and Moderate-Income Communities
J. Barth (2005)
The New Directions of Expected Utility Theory
F. Zurita (2005)
O empreendedorismo emigrante: o caso dos portugueses em Londres
N. P. Silva (2014)
Ownership and the Changing Employment Relationship: Why Stylized Notions of Labor No Longer Generally Apply—A Reply to Zardkoohi and Paetzold
D. Rousseau (2004)
A Resource Based Interpretation of Performance Enhancing Capital Structure Changes: The O.M. Scott LBO Revisited
P. Wirtz (2004)
Labor Supply , Self-insurance and Knightian Uncertainty
Hening Liu (2006)
Schumpeterian Dynamics and Financial Market Anomalies
Thomas Grebel (2004)
Foundations of Entrepreneurship and Economic Development
D. Harper (2003)
Institutional activism in the early American automobile industry
H. Rao (2004)
The Internationalization of Regulation: Implications for Developing Countries
G. Majone (2004)
Entrepreneurship: Konturen einer jungen Disziplin
Michael J. Fallgatter (2004)
Self-employment across 15 European countries: the role of dissatisfaction
A. Stel (2003)
M. Stinchcombe (2003)
Evolution and Institutions: A Cognitive Perspective
B. Loasby (2002)
Desenvolvimento econômico, preferência pela liquidez e acesso bancário: um estudo de caso [Economic development, liquidity preference and access to bank services: a case study]
M. Crocco (2003)
The Theory of Incentives: The Principal-Agent Model
J. Laffont (2001)
Classifying Technology Policy from an Evolutionary Perspective
U. Cantner (2001)
An axiomatic approach to decision under Knightian uncertainty
J. Engler (2013)
Entrepreneurial Collaboration: Terms of Endearment or Rules of Engagement?
T. Quince (2001)
The Dynamics of Firm and Industry Growth : The Swedish Computing and Communications Industry
D. Johansson (2001)
Simon Says: Bounded Rationality Matters
M. Augier (2001)
I. Jewitt (2011)
Aspiration Level, Labor Market Evaluation, and the Decision to Become an Entrepreneur
S. Venkataraman (2001)
See more
Semantic Scholar Logo Some data provided by SemanticScholar