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# System prepended metadata

title: Uncertainty management

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# Uncertainty management

See [here](https://criticaluncertainties.com/2009/10/11/epistemic-and-aleatory-risk/) for an intro to aleatory, epistemic and ontological uncertainties. [Intelligence sharing](/d_pInVkpRs2VWG3IaE_B-A) can reduce monitoring costs.

* [Macroeconomics after the crisis: time to deal with the pretense-of-knowledge syndrome](https://www.nber.org/system/files/working_papers/w16429/w16429.pdf)'... complexity and lack of history are the preconditions for rampant [Knightian] uncertainty.' - footnote on page 13. Also '... in an episode of Knightian uncertainty, a government or central bank concerned with the aggregate will want to provide insurance against extreme events, even if it has no informational advantage over the private sector. The reason is that during a panic of this kind, each individual bank and investor fears being in a situation worse than the average, an event that cannot be true for the collective (individual agents know this aggregate constraint, but they assume they will be on the short end of things).  By providing a broad guarantee, the government gets the private sector to react more than one-for-one with this guarantee, because it also closes the gap between the true average and the average of panic-driven expectations' (page 15).
* [Knightian uncertainty and TARP](https://economistsview.typepad.com/economistsview/2008/11/knightian-uncer.html)

## Risk

[Risks](/vlzc8wOPTsu18oMWc64wpw?both) may be hard to estimate for individual businesses, but pooling risk in a trade credit club may make it easier to assess and manage: transformation in type and reduction in uncertainties associated with late payment/default risks.

(Ported from [late payment](/iIVkdpz_S76a_6FexHZWAw?both) risk): Since the system's record will be available (in contrast to the bilateral histories of the intended partners), reduced uncertainty may actually make new trading activity more likely. In other words, the club may be able to offer a guarantee of rapid fiat payment 'from' previously unknown parties that is not otherwise available.