The role of fundamental uncertainty in economics and decision-making

Bélyácz, Iván (2023) The role of fundamental uncertainty in economics and decision-making. ECONOMY AND FINANCE: ENGLISH-LANGUAGE EDITION OF GAZDASÁG ÉS PÉNZÜGY, 10 (2). pp. 120-162. ISSN 2415-9379

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Abstract

The subject of this paper is the direct influence of uncertainty on economic decisions. The first part is a historical overview of the use of probability as a decisionmaking tool. The second part explores points of connection between Keynesian economics and uncertainty. After the discussion of epistemological and ontological uncertainty, the substance of fundamental uncertainty is elaborated. A separate section is dedicated to the role of ‘animal spirits’, conventions and ‘black swan’ phenomena. The closing section focusses on atomic and organic interrelationships in the economic material, the relation between complexity and uncertainty, and with the triangle probability-uncertainty-econometrics. The aim of the paper is to substantiate that uncertainty – whether it is termed ‘fundamental’, ‘radical’, ‘irreducible’ or else – is unavoidably and inevitably part of economic reasoning and decision-making.

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