Why (and How) to Give Uncertainty its Due
Publication Title
Critical Review
Volume
37
Year
2025
Abstract
We live in a world of uncertainty. Amar Bhidé’s book, Uncertainty and Enterprise: Venturing Beyond the Known, does an enormous service in bringing the topic to the forefront. What are we uncertain about? Principally, about the future – we don’t know what will happen. We may not even know the range of possibilities, much less the associated probabilities. But even our construction of the past and present is often uncertain. We construct narratives regarding what happened and why, based on our present understanding of what is so—an understanding that is often significantly incomplete and subject to revision. Even the description of what happened will differ depending on the underlying causal narrative, something that affects our understanding—and planning—going forward. Why haven’t we thought more about uncertainty? Attempts to be more realistic about human behavior than the orthodox rationality paradigm could have taken uncertainty and reactions thereto, more into account; instead, the dominant focus has been on mistakes humans make, “irrationality.” Reality is straightforward—people are just getting it wrong. But reality isn’t that straightforward—again, we live in a world of uncertainty. In my book with my colleague Richard Painter on bankers’ behavior in the years leading up to the 2008 financial crisis, we detailed why bankers had behaved as they did, given the world as it reasonably, and rationally, seemed to them, in a world of uncertainty, where they sought to maximize their employers’ well-being and their own, and there were no sufficiently agreed-upon ways to assess probabilities—at least not until it was too late. Lawmakers, regulators, and policymakers will continue to be ill-served if they do not do a better job of taking uncertainty into account.
Recommended Citation
Claire A. Hill, Why (and How) to Give Uncertainty its Due, 37 Critical Rev. (2025), available at https://scholarship.law.umn.edu/faculty_articles/1116.
Rights
http://rightsstatements.org/vocab/InC/1.0/
