Routledge Dictionary of Economics, Second Edition
A state of affairs with an unknown outcome not subject to a probability distribution. In economics, there are many states of uncertainty, e.g. of demand, of returns to investment.
Uncertainty imposes many costs, e.g. the holding of higher inventories to safeguard against an irregular supply of raw materials and components. The forms of uncertainty are as various as its determinants—competition, technological change, the business cycle and change of government or governmental policies.
See also: risk
References
Borch, K.H. (1968) The Economics of Uncertainty, Princeton, NJ: Princeton University Press.
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