Real decisions operate under uncertainty where probabilities are unknowable, not just risk

Evidence

Zeckhauser (2014, 8–9) calls for more systematic economic research into uncertainty, rather than risk: “Economists now understand that risk is a terrific subject for gamblers, for students in high school math, and for insurance companies having data that enable them to predict the probabilities of micro-outcomes with reasonable reliability. But for investors, business folks, government officials, physicians, international diplomats, those in romantic pursuit, and parents of young children, indeed for almost anybody else, risk is an intriguing subject that bears little relation to the real decisions they face. Unknown outcomes confront these players every day, and the probabilities are virtually never known nor knowable. Uncertainty, not risk, is the difficulty regularly before us. That is, we can identify the states of the world, but not their probabilities.” — Aris Komporozos-Athanasiou, Speculative Communities, 388

Categorization

• DEFINE: Sharply distinguishes uncertainty (unknowable probabilities, pervading daily decisions) from risk (calculable probabilities), a foundation for homo speculans.
• XREF: Connects to Knightian uncertainty (Frank Knight’s classic distinction) which this is clearly echoing.