Books

First edition, the author's copy, presentation copy, inscribed to fellow economist George Stigler, "To George Stigler May 27, 1963, F.H.K.", and additionally signed by Knight on the front pastedown. This copy bears autograph pencil changes to three pages (53, 101, 152): two use proofreading symbols to insert and delete phrases, one corrects a reference to a figure in the text, another a spelling error in an author's name ("Mills" corrected to "Mill"). A further fifteen openings carrying marginal pencil side-rules and underlining to the text. Following his master's degree at Northwestern University, George Stigler moved to Chicago in 1933 to work on his dissertation under Knight's supervision at the University of Chicago. The thesis was completed in 1938 and published in 1941 under the title Production and Distribution Theories. In a memoir entitled Frank Knight as Teacher (Journal of Political Economy, 1973) Stigler observed that "he was so generous with time and knowledge that some dissertations - I have my own in mind - ought at a minimum to have listed a collaborator". Stigler remained in contact with Knight after his retirement, and contributed a preface to the Chicago reprint of Risk, Uncertainty and Profit. This copy has passed by descent to the present owner. Risk, Uncertainty and Profit is Knight's first major work, written as a doctoral dissertation at Cornell in 1916. In it Knight advances Richard Cantillon's early treatment of risk in the 1755 Essay of the Nature of Commerce, setting forth the two ideas for which he is best known; firstly, the distinction which can be made between economic risk and uncertainty and, secondly, the location of the source of 'profit' in the returns from exposure of business activities to uncertainty. Knight's argument concluded that "profits could arise only in an economy where the future was not known with certainty" (Rubinstein, p. 51). Risk, Uncertainty and Profit is acknowledged to be a classic and groundbreaking work of economics. Peter Bernstein judged it "the first work of any importance, and in any field of study, that deals explicitly with decision-making under conditions of uncertainty" (p. 219), and Harold Batson suggests that "it would, in fact, be difficult to discover a better short statement of pure economic theory" (p. 27). Batson, p. 27. See Peter Bernstein, Against the Gods: The Remarkable Story of Risk (1996); Mark Rubinstein, A History of the Theory of Investments (2006). Octavo (202 x 126 mm). Original red cloth, spine lettered gilt. Spine ends lightly rubbed, endpapers toned; a very good copy.

Risk, Uncertainty and Profit, written by Frank H. Knight, is a landmark in economic literature that introduces the distinction between risk, which can be measured and quantified, and uncertainty, which cannot.