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Handbook of the Economics of Risk and
Uncertainty
Kenneth J. Arrow
Department of Economics, Stanford, CA, USA
That the world is uncertain is an everyday observation. Any theory of action, and
certainly economics is or seeks to be a theory of action, must take account of the fact
that the choices have uncertain consequences. This preface is a set of musings on these
issues, which are illuminated in this Handbook.
The elementary fact of uncertainty raises many questions, basic to both the logic of
research and to understanding the role of uncertainty in the economic system. I will talk
about three. (1) How do we describe uncertainty? (2) What ...