Travis Holmes

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

The debate over the explanatory nature of cognitive models has been waged mostly between two factions: the mechanists and the dynamical systems theorists. The former hold that cognitive models are explanatory only if they satisfy a set of mapping criteria, particularly the 3M/3m* requirement. The latter have argued, pace the mechanists, that some cognitive models are both dynamical and constitute covering-law explanations. In this paper, I provide a minimal model interpretation of dynamical cognitive models, arguing that this both provides needed clarity to the mechanist versus dynamicist divide in cognitive science and also paves the way towards further insights about scientific explanation generally.

The question of how to frame agential preferences in economics finds one caught between Scylla and Charybdis. If preferences are framed in as minimal and deflationary a manner as revealed preference theory recommends, the theory falls prey to objections about its predictiveness and explanatory power. Alternatively, if too many cognitive and causal intricacies are incorporated into the preference concept, revealed preference models will violate pragmatic norms of model construction, surrendering model simplicity and generality. This paper charts a middle course, arguing that the path to salvation lies through an understanding of revealed preference models as program explanations.

The increasing preponderance of opinion that some natural phenomena can be explained mathematically has inspired a search for a viable account of distinctively mathematical explanation. Among the desiderata for an adequate account is that it should solve the problem of directionality and the reversals of distinctively mathematical explanations should not count as members among the explanatory fold but any solution must also avoid the exclusion of genuine explanations. In what follows, I introduce and defend what I refer to as a quasi-erotetic solution which provides a remedy to the problem in the form of an additional necessary condition on explanation.

A subarea of the debate over the nature of evolutionary theory addresses what the nature of the explanations yielded by evolutionary theory are. The statisticalist line is that the general principles of evolutionary theory are not only amenable to a mathematical interpretation but that they need not invoke causes to furnish explanations. Causalists object that construction of these general principles involves crucial causal assumptions. A recent view claims that some biological explanations are statistically autonomous explanations (SAEs) whereby phenomena are accounted for statistically and which prescind from micro-causal details. I raise three major problems for this account and then advance a view which unifies SAEs as mathematical explanations: the MSAE view. The MSAE view not only resolves the issues bedeviling the original SAE account but serves to importantly broaden the class of non-causal explanations in population biology.

This paper advances the view that some explanations in cognitive science are extra-mathematical explanations. Demonstrating the plausibility of this interpretation centers around certain efficient coding cases which ineliminably enlist information theoretic laws, facts and theorems to identify in-principle, mathematical constraints on neuronal information processing capacities. The explanatory structure in these cases is shown to parallel other putative instances of mathematical explanation. The upshot for cognitive mathematical explanations is thus two-fold: first, the view capably rebuts standard mechanistic objections to non-mechanistic explanation; second, this view serves to importantly widen the possibility space for non-mechanistic forms of explanation in cognitive science.

In scientific modeling, continuum idealizations bridge scales but at the cost of fundamentally misrepresenting the microstructure of the system. This engenders a mystery. If continuum idealizations are dispensable in principle, this de-problematizes their representational inaccuracy, since continuum properties reduce to lower-scale properties, but the mystery of how this reduction could be carried out endures. Alternatively, if continuum idealizations are indispensable in principle, this is consistent with their explanatory and predictive success but renders their representational inaccuracy mysterious. I argue for a deflationary solution, enlisting the applied scientific method of upscaling as demonstrated in a case from soil hydrology.

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