Risk versus Uncertainty

I have read the book Radical Uncertainty: Decision Making Beyond the Numbers by Mervyn King & John Kay. As the title suggests, it talks about radical uncertainty. What is uncertainty? Its definition is simple: any uncertain knowledge. But there are two types of uncertainty:

·         Risk: Measurable or resolvable uncertainty. Probability calculations can be applied. Example: the outcome of a roulette or lottery game. Problems of this type can be called puzzles. Phenomena of this type are stationary (their properties do not change over time).

·         Radical uncertainty: Uncertainty that is not measurable. It arises when there is obscurity, ignorance, vagueness, ambiguity, ill-defined problems, lack of information. It cannot be described by probability calculations. Problems of this type can be called mysteries. Phenomena of this type are usually not stationary.

The principle of indifference

In several previous posts I have applied the principle of indifference, albeit I did not call it by that name.

• In the post The eerie silence I wrote this:

The probability of the existence of extraterrestrial intelligence is 50%. As we know nothing, this is equivalent to throwing a coin, and if it comes up heads, we say that we are alone; if tails, that we have company.

• In the post Relativism in science? I said this:

If we have no reason to assume that a theory is true or false, its probability should be close to 0.5... Theories about which we have no information, for or against, with a probability between 0.4 and 0.6. I will cite the existence of extraterrestrial intelligence, the possibility of building strong artificial intelligence, or the various theories of the multiverse.