Risk, Uncertainty and Profit

  title={Risk, Uncertainty and Profit},
  author={Frank Hyneman Knight}
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… 
Uncertainty, Profit, and the Limits of Markets
The neoclassical market model is the overwhelming basis for contemporary views of markets as fair, efficient, or both. But is it an appropriate starting point? The article draws on Frank Knight’s
The Origin of Profit
Once again, the concepts of uncertainty and risk underlying modern economic theory have their origins in Frank H. Knight’s classical book Risk, Uncertainty and Profit (1921). Knight was the first to
Asset Pricing Under Ambiguity and Heterogeneity
Financial markets are becoming increasingly complex, volatile and uncertain in light of the recent financial crisis. Markets are characterised by a variety of anomalies and stylised facts that pose
Entrepreneurial Risk and Market Entry
This paper attempts to reconcile the risk-bearing characterization of entrepreneurs with the stylized fact that entrepreneurs exhibit conventional risk-aversion profiles by constructing a reduced-form model of the entrepreneur's entry decision, which is aggregate to the market level, and finds that entrepreneurs in aggregate behave as they predict.
Frank H. Knight on Uncertainty and Profit: Manager Versus Entrepreneur
This chapter aims to carefully discuss how Frank H. Knight, the "Grand Old @Man" of Chicago, dealt with uncertainty and profit, with special reference to manager versus entrepreneur. Frankly
Embrace or Fear Uncertainty: Growth Options, Limited Risk Sharing, and Asset Prices∗
The impact of uncertainty shocks on asset prices and macroeconomic dynamics depends on the degree of risk sharing in the economy and the origin of uncertainty. We develop a general equilibrium model
Technical Analysis under Knightian Uncertainty
Technical analysis, or the forecasting of asset price movements using past prices, is commonly practiced in financial markets but poorly explained by mainstream economic theory. I show that a
Uncertainty and Management Accounting: Opportunity, Profit Opportunity, and Profit
  • A. Nishimura
  • Business
    Management, Uncertainty, and Accounting
  • 2018
This chapter, in relation to ‘value concept’ in the previous chapter, considers the concept of profit in the management cycle, from uncertainty through probability of profit to realization of profit,
Risk Premia and Knightian Uncertainty in an Experimental Market Featuring a Long-Lived Asset
Objectives: I examine risk premia and the influence of Knightian uncertainty in a laboratory market featuring a long-lived asset. Methods: I employ an experimental asset market, utilizing features
Knightian uncertainty and insurance regulation decision
In contrast to insurance companies, regulatory authorities or regulators can obtain only limited information about the companies’ value. It hence leads to some effects on the regulation design, which