Entrepreneurial Beliefs and Agency under Knightian Uncertainty

Abstract At the centenary of Frank H. Knight’s Risk, Uncertainty, and Profit (1921), we explore continuing relevance Knightian uncertainty to theory practice entrepreneurship. There are three challenges facing such assessment. First, RUP is complex difficult interpret. The key but neglected element that account not solely about risk as states nature, how an agent’s beliefs uncertain outcomes confidence in those guide their choices. Second, only effort this area. His subsequent career led elsewhere, so he did engage with interpretations work. Third, much current literature emphasizes decisions must be different under two nature a consequent misunderstanding entrepreneurial agency. This paper addresses each challenge sequence. explicate (1921) approach explain why murky. complement interpretation, examine P. Ramsey’s subjective probabilities help clarify murky approach. What links Knight Ramsey shared pragmatism agency depends upon about, in, judgments possible outcomes. Knight-Ramsey does require actor’s behaviors determined by class environment (whether risk, uncertainty, or ambiguity) they face. We focus on response entrepreneur existence all its forms. argue reductive provides foundation common problems management, including managerial hubris, interaction between entrepreneurs venture capitalists, need for experimentation (such prototyping market research) advance new product launches. critique favors epistemic purism ontology ignores meeting using formal informal institutions mitigation. Our locates subtleties behavior firmly century later.