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Unknowns, Black Swans and the risk/uncertainty distinction

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  • Phil Faulkner
  • Alberto Feduzi
  • Jochen Runde

Abstract

Tony Lawson’s work on probability and uncertainty is both an important contribution to the heterodox canon as well as a notable early strand of his ongoing enquiry into the nature of social reality. In keeping with most mainstream and heterodox discussions of uncertainty in economics, however, Lawson focuses on situations in which the objects of uncertainty are imagined and can be stated in a way that, potentially at least, allows them to be the subject of probability judgments. This focus results in a relative neglect of the kind of uncertainties that flow from the existence of possibilities that do not even enter the imagination and which are therefore ruled out as the subject of probability judgments. This paper explores uncertainties of the latter kind, starting with and building on Donald Rumsfeld’s famous observations about known unknowns and unknown unknowns. Various connections are developed, first with Nassim Taleb’s Black Swan, and then with Lawson’s Keynes-inspired interpretation of uncertainty.

Suggested Citation

  • Phil Faulkner & Alberto Feduzi & Jochen Runde, 2017. "Unknowns, Black Swans and the risk/uncertainty distinction," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 41(5), pages 1279-1302.
    • Handle: RePEc:oup:cambje:v:41:y:2017:i:5:p:1279-1302.
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    File URL: http://hdl.handle.net/10.1093/cje/bex035
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    References listed on IDEAS

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    1. Michael T. Pich & Christoph H. Loch & Arnoud De Meyer, 2002. "On Uncertainty, Ambiguity, and Complexity in Project Management," Management Science, INFORMS, vol. 48(8), pages 1008-1023, August.
    2. Feduzi, Alberto & Runde, Jochen, 2014. "Uncovering unknown unknowns: Towards a Baconian approach to management decision-making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 124(2), pages 268-283.
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    Cited by:

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    2. Mario Le Glatin & Pascal Le Masson & Benoit Weil, 2018. "Can organisational ambidexterity kill innovation? A case for non-expected utility decision making," Post-Print hal-01808566, HAL.
    3. Phil Faulkner & Stephen Pratten & Jochen Runde, 2017. "Cambridge Social Ontology: Clarification, Development and Deployment," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 41(5), pages 1265-1277.
    4. McMullen, Jeffery S. & Fitzsimmons, Jason R. & Shetty, Khyati & Ramoglou, Stratos, 2024. "A temporal typology of entrepreneurial opportunities: Implications for the optimal timing of entrepreneurial action," Journal of Business Venturing, Elsevier, vol. 39(1).
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    10. Imko Meyenburg, 2022. "A possibilist justification of the ontology of counterfactuals and forecasted states of economies in economic modelling," Working Papers hal-03751205, HAL.

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