Frank Knight

Frank Knight was an American economist at the University of Chicago generally credited as a founding figure of the Chicago School of economics. His 1921 book Risk, Uncertainty and Profit drew an influential distinction between risk, a possible future outcome whose probability can be measured, and uncertainty, a possible future outcome whose probability cannot be meaningfully measured at all, arguing that genuine entrepreneurial profit is the reward for bearing this second, unmeasurable kind of uncertainty rather than merely for bearing calculable risk. Knight arrived at the University of Chicago in 1927 and helped establish the price theoretic, market oriented approach to economics that later Chicago economists including Milton Friedman and George Stigler carried forward, though Knight himself was in some ways more skeptical of confident free market policy conclusions than the economists he trained.