Name: Risk, uncertainty and profit
ISBN: 9780984061426

What Hacker News says

bambaxOct 2025

Most of the books I read are from authors long dead (current one: Risk, Uncertainty, and Profit, by Frank H. Knight, highly recommended). They don't need the money.

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kriroJan 2017

A slight nitpick but I think the luck you manage in boardgames is risk and there's also the category of uncertainty which you can't manage (because you don't know the probability distribution or the fact that something is possible/could happen at all).

See "Risk, Uncertainty, and Profit" by Frank Knight for a much better explanation of risk vs. uncertainty than what I can muster. I think it's noteworthy that entrepreneurship theory from economics tends to be build around the idea that it is indeed handling uncertainty (and not risk) that yields entrepreneurial profits.

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vezzy-fnordDec 2015

Parks, libraries and schools are largely not communally-owned spaces, but government-owned. Crucial distinction. In fact, some of the best alternatives to the traditional classroom model (i.e. Montessori, Sudbury, democratic, etc.) tend to be privately run schools. As such, private schools are on the positive side here.

Again, this mystical "community" is mostly an illusion. It's either private ownership or government ownership via eminent domain. Commons aren't applicable in most cases.

Bonds with extended family are to be settled on an individual case-by-case basis. Many people rightfully may consider their extended families to be not worth interacting with, and in any event this is all a flimsy normative sentiment.

Beauty standards are determined first societally, then by entrepreneurs. The profit motive is intrinsic to a world of uncertainty (see Frank H. Knight's Risk, Uncertainty and Profit). It is wholly neutral. There is nothing wrong with pursuing profits, even though a lot of people have an anti-capitalist bias and are convinced it's demonic.

I mostly agree, except in the sense that people are maybe being sold a bad cure for an ailment they might not have had, spending money they don't have, perpetuating the problems that caused them to want to escape in the first place.

Clearly these are unresolved issues on part of the consumer.

Markets are flawed because the actors in them are not rational or well-informed (which is often an axiom of whatever model one chooses to use), and because the actions available to them are dictated by those currently on top.

This is the almost cliched refrain of every moral reformer. Market participants are irrational, therefore $SOCIAL_ENGINEERING_POLICY_OF_CHOICE. Of course, there is information asymmetry in anything one does (market or no market), and the classic resolutions are through screening or signaling.

(Also, the definitions of "rational" and "informed" in economics are quite different from their colloquial counterparts. Moreover, assuming universal irrationality by default leads to nihilistic conclusions. At least it should anyway, most people use it as an excuse for their pet reforms by completely ignoring the irrationality in state institutions.)

For instance, violence or overt threats of violence in pursuit of gain is considered to be taboo in markets (that I know of), since those who have goods or the means to produce them generally want to keep that relative power over those who do not.

What the fuck? Violence is taboo in markets because the bourgeoisie capitalists want to exploit the underdogs? Could it possibly be because the initiation of force against voluntary actors is considered immoral by almost everyone? Hopefully you do, as well, but I can't deduce.

EDIT: The anti-capitalist and socialist crankery seems to be inherent from examining your post history.

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ImustaskforhelpAug 2026

> I don't think we know yet what is going to happen as software development gets much cheaper. If in ten years we can produce software 1000x more cost effectively, will we need fewer software engineers, the same, or more? Guess we'll see!

Adding onto it, I feel as if this relates to some points regarding predictions of future in general. It is easier for us to look from the future to the past and think that it must be very obvious (as you also mention) but its also very counter-intuitive at the same time and there are just so so much nuance about basically any situation within it that its hard to really capture it all, and even then, be prepared for surprises and counter-intuitiveness.

I really like the Peter Drucker quote about it.

“The only thing we know about the future is that it will surprise us.” — Peter Drucker

and, “The future is fundamentally different from the past.” — Frank Knight, Risk, Uncertainty and Profit (1921)

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ganeumannJan 2015

[I wrote the 1980s VC post]

When I think about building entirely new markets, I don't think the risk is the quantifiable risk that you're thinking of. It's what Frank Knight called "uncertainty" (Knight, "Risk, Uncertainty and Profit", http://www.econlib.org/library/Knight/knRUP.html). I prefer to call it "unknowability", but the concept is the same.

The unknowability of new markets is what makes them so valuable. If it were just risk, then it could be managed (ie. insurance) and established businesses would create all new markets. This, it seems, is not what is happening.

That said, I don't think Chris has misanalyzed the situation. It's just that he and I start with fundamentally different beliefs: I think Perez is wrong, and he thinks she is right. My post was written partly out of my rejection of Perez, but I don't think it comes anywhere close to actually refuting her.

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besquaredSep 2009

Arbitrage supplies liquidity at all prices, including prices where most trades might not otherwise occur. Liquidity is required for businesses to systematically eliminate risk, therefore it is highly valued as a source of stability for most companies who deal with financial instruments.

Knight has some thoughts on systematic risk in his book Risk, Uncertainty and Profit.

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