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Risk, Uncertainty and Profitby Frank Hyneman Knight
Synopses & Reviews
One of the twentieth century's most influential economics texts, Risk, Uncertainty and Profit provided the theoretical basis of the entrepreneurial American economy during the post-industrial era. This revolutionary work taught the world how to systematically distinguish between risk (randomness with knowable probabilities), and uncertainty (randomness with unknowable probabilities), in order to accurately and properly ascertain a venture's potential profitability.
Author Frank H. Knight's methodology served as the foundation of the Chicago School of Economics, maintaining that competition in a free market economy is the best method for achieving economic health. In this 1921 book, Knight explains why perfect competition would not necessarily eliminate profits, because of "uncertainty," rather than "risk." He contends that even in long-run equilibrium, entrepreneurs would earn profits as a return for their toleration of uncertainty. Knight's reasoning remains valid in the twenty-first century, and his definitions of risk and uncertainty continue to be taught in modern economics classes.
Sociologist Edward Shils declared Risk, Uncertainty and Profit "a brilliant book," noting its interest not only to economists but also to social philosophers, sociologists, game theorists, and other specialists in social science.
Originally published: Boston: Houghton Mifflin, 1921, in series Hart, Schaffner & Marx prize essays on economics; no. 31.
This revolutionary work taught the world how to systematically distinguish between risk randomness with knowable probabilities and uncertainty randomness with unknowable probabilities in order to accurately and properly ascertain a venture's potential profitability. Knight's methodology served as the foundation of the Chicago School of Economics.
This revolutionary work taught the world how to systematically distinguish between risk — randomness with knowable probabilities — and uncertainty — randomness with unknowable probabilities — in order to accurately and properly ascertain a venture's potential profitability. Knight's methodology served as the foundation of the Chicago School of Economics.
Table of Contents
Preface to the First Edition
Preface to the 1933 Edition
Preface to the 1948 Edition
Preface to the 1957 Edition
Part One: Introductory
and#160; I. The Place of Profit and Uncertainty in Economic Theory
and#160; II. Theories of Profit; Change and Risk in Relation to Profit
Part Two: Perfect Competition
and#160; III. The Theory of Choice and of Exchange
and#160; IV. Joint Production and Capitalization
and#160; V. Change and Progress with Uncertainty Absent
and#160; VI. Minor Prerequisites for Perfect Competition
Part Three: Imperfect Competition Through Risk and Uncertainty
and#160; VII. The Meaning of Risk and Uncertainty
and#160; VIII. Structures and Methods for Meeting Uncertainty
and#160; IX. Enterprise and Profit
and#160; X. Enterprise and Profit. The Salaried Manager
and#160; XI. Uncertainty and Social Progress
and#160; XII. Social Aspects of Uncertainty and Profit
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