This Is Not A Disruptive Blog Post

By MICHEL ACCAD, MD
Frank Knight, risk and uncertainty

In this article, I wish to introduce the reader to the theory of entrepreneurship advanced by Frank Knight (1885-1972), and show that the common, everyday work of the physician could be considered a form of entrepreneurial activity in the Knightian sense.
Knight was an influential American economist. He is best known for his book Risk, Uncertainty, and Profit in which he proposed to distinguish risk and uncertainty as follows:
Risk pertains to situations where outcomes occur with a frequency that is quantifiable according to probability distributions.
Risk may be mathematical and a priori knowable, meaning that the probability function that governs the outcome is known with certainty, as in the case of a coin toss (assuming the coin to be well balanced).
Risk may also be statistical, where the outcome can be estimated according to an empirically discoverable probability function. This is the case in situations where we know the set of possible outcomes and can make observations under controlled conditions to determine the probability of occurrence of each outcome.

Uncertainty, on the other hand, pertains to situations where the probability of an outcome cannot be quantified in any meaningful way. The situation is such that we don’t even know the set of all possible outcomes, let alone what numerical probabilities to assign to those outcomes. Knight believed that most situations involving human beings fall...

Source: The Health Care Blog - December 8, 2015 Category: Consumer Health News Authors: Simon Nath Tags: THCB MICHEL ACCAD Source Type: blogs