Abraham Wald's Complete Class Theorem and Knightian Uncertainty

2015 ◽  
Author(s):  
Christoph Kuzmics
Keyword(s):  
Knightian Uncertainty ◽  
Complete Class

Institutions, uncertainty, and entrepreneurial judgment

2021 ◽  
pp. 1-11
Author(s):  
Claus Wiemann Frølund
Keyword(s):  
Human Interaction ◽  
Knightian Uncertainty ◽  
Entrepreneurial Process ◽  
Course Of Action ◽  
Judgment Process ◽  
Entrepreneurial Action ◽  
The Way

Abstract Entrepreneurial action takes place in a context of Knightian uncertainty. In order to overcome this uncertainty, entrepreneurs engage in a process of judgment resulting in a decision about the course of action. Institutions arise mainly to reduce economic friction by providing structure to human interaction and thus reducing uncertainty. However, institutions may also introduce further uncertainty and thus disrupt the judgment process preceding entrepreneurial action. The present paper builds upon recent efforts to integrate the concepts of uncertainty and institutions within the entrepreneurial context. Drawing on Frank H. Knight's seminal insight, the judgment-based view of entrepreneurship, and relevant concepts of entrepreneurial outcomes, the main contribution of the paper lies in the development of a model offering a coherent description of the way institutions affect uncertainty and the entrepreneurial process.

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