Talk:Knightian uncertainty

Black swan?

I wonder how far this is related with Taleb's black swan. http://en.wikipedia.org/wiki/Black_swan_theory

This is indeed related to the black swan! Taleb argues strongly against concepts such as ´´knightian uncertainty´´, in fact he argues against any way of distinguishing different kinds of uncertainty. In the black swan, the book, look for section named "The uncertainty of the nerd", for this. I will add a reference to this book to the article. --Kjetil Halvorsen 16:34, 28 January 2010 (UTC) —Preceding unsigned comment added by Kjetil1001 (talk • contribs)

-- My opinion is that the section for Nassim Taleb looks promotional, it also distracts from "Fundamental Uncertainty" by referencing "Black Swan" concept which has more to do with tails of a distribution, model risks, robustness and extreme value theory. Given that Taleb's book does indeed reference "Knightian uncertainty" perhaps it could be demoted to a supporting link. Alternatively if we include this rambling section we may as well mention Rumsfeld's "Unknown Unknowns" .. in my view that would be equally uninformative about the context Frank Knight was writing about. Jayprich (talk) 21:58, 14 February 2018 (UTC)

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BetacommandBot 11:29, 6 July 2007 (UTC)

Ellsberg paradox

I doubt that Knightian uncertainty can be related to the Ellsberg paradx: If you draw from Ellsberg's urn you can make a statement about the probability of the colour you draw, at least theoretically so. By randomly drawing you could even infer the odds by the law of large numbers. Therefore, the probabilities ARE measurable. Knight by contrast emphasises that they cannot be measured! There need to be a distinction between probs which are there and those which are not. If it is possible to assign a probability but we do not know it we have ambiguity, if it is not possible to assign a probability (end hence it cannot be measured) then we face uncertainty. Maybe Knight should have made himself clearer about what he actually had in mind ;-) 160.85.104.70 (talk) 11:46, 8 January 2013 (UTC)

I agree - the "Ellsberg paradox" reveals the nature of human preference / utility function. The probabilities would fit within a Bayesian model. The fact that ranking of risk preference is not-probabilistic in the sense of mean (average) outcomes simply means people also care about "second order" effects. Here it could be modelled as a parameter uncertainty. I would suggest removing this section and including a short compare/contrast an estimable "risk". Jayprich (talk) 21:52, 14 February 2018 (UTC)

No objection received via talk so I've gone ahead and deleted this reference.Jayprich (talk) 16:50, 20 February 2018 (UTC)

Needs section on making decisions

I think the article should have a section on how to make decisions in the face of Knightian uncertainty. I’m not too familiar with this, but I think that a discussion of uninformative Bayesian priors may be relevant. Loraof (talk) 16:25, 30 September 2018 (UTC)