Practice question · Multiple choice
By Knight’s distinction, which situation involves uncertainty rather than risk?
Hints
- Risk has a probability you could quote to an insurer.
- For which outcome does no actuarial table exist?
Show the answer
D. Whether consumers will adopt a new product category
Why
Fires, dice, and loan defaults have measurable frequencies, insurable risk. A brand-new product has no history to compute odds from: Knightian uncertainty, the entrepreneur’s true domain.
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