55 - Quant uncertainty

In 'Radical Uncertainty: Decision-Making Beyond the Numbers,' Mervyn King and John Kay discuss the concept of radical uncertainty, which involves events whose determinants are insufficiently understood for probabilities to be known or forecasting to be possible. The authors argue that many critical decisions cannot rely on forecasts or probability distributions and instead advocate for strategies that are robust to alternative futures and resilient to unpredictable events. They critique the overreliance on statistical models and rational choice theories, emphasizing the importance of narratives, abductive reasoning, and understanding the context of decision-making. The book covers various fields including economics, finance, policy studies, and more, using real-life examples to illustrate the folly of predictive models and the need for a more nuanced approach to uncertainty.