Frank Knight (Economist)

Frank Knight was an influential American economist best known for distinguishing between risk and uncertainty in economic decision-making. Risk involves situations with known probabilities, like rolling dice, where outcomes can be statistically predicted. Uncertainty, however, refers to situations with unknown probabilities, such as pioneering new products or entering uncharted markets, making outcomes unpredictable. Knight argued that entrepreneurs and businesses thrive by navigating uncertainty, which can’t be easily measured or insured against. His ideas helped shape modern economic thought on how innovation, entrepreneurship, and market dynamics function in complex, unpredictable environments.