Theory In Practice
Knight’s Uncertainty Theory of Profit was proposed by American economist Frank H. Knight in his classic book Risk, Uncertainty and Profit (1921). Knight asserts that entrepreneurs’ profits are directly related to uncertainty, which arises from unmeasurable risk. His theory is one of five major theories of profit. This lesson examines Knight’s theory as compared to other major profit theories, providing a framework for analysis and practical examples for real-world applications. It is of particular use to students of business, economics, and entrepreneurship.