Black swans and Knight's epistemological uncertainty: are these concepts also underlying behavioral and post-Walrasian theory?

Abstract

This paper argues that Nassim Taleb's "black swan" argument regarding uncertainty is equivalent to Frank Knight's epistemological concept of uncertainty. Moreover, both behavioral economists and post-Walrasians use an epistemological concept of uncertainty, in part related to Taleb's black swans. This black swan approach differs significantly from Keynes's idea that uncertainty is an ontological concept. Consequently, these different uncertainty concepts have different policy implications.

Keywords:

• behavioral theory
• black swans
• Keynes
• Knight
• post-Walrasians
• risk
• Taleb
• uncertainty