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Acts of God and ManRuminations on Risk and Insurance$
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Michael Powers

Print publication date: 2014

Print ISBN-13: 9780231153676

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231153676.001.0001

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What Is Randomness?

What Is Randomness?

Knowable and Unknowable Complexity

Chapter:
(p.177) 11 What Is Randomness?
Source:
Acts of God and Man
Author(s):

Michael R. Powers

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231153676.003.0011

Random variables are commonly used to model unknown quantities, including the full gamut of risks, in the physical world. However, this generally is done without either a formal definition of randomness or even a convincing demonstration that truly random processes actually exist. Another source of mystery—the conspicuous analogy between randomness as the uncertainty of the outside world and free will as the uncertainty of the mind—offers the possibility that an understanding of randomness can offer an instructive glimpse into the fundamental principles of human behavior and ethics. This chapter considers the first of several challenges to a science of risk by addressing the subtleties and limitations associated with an understanding of randomness. It examines two types of uncertainty: knowable complexity (KC) and unknowable complexity (UC). It argues that no systematic approach to the study of randomness can ever: (1) confirm a source of uncertainty as UC; or (2) confirm some sources of uncertainty as KC without inevitably creating type-2 errors in other contexts.

Keywords:   random variables, randomness, risk management, uncertainty, knowable complexity, unknowable complexity

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