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Uncertainty and information are ideas that have a central role in contemporary econom­ics in the domain of decision theory.

The expected utility hypothesis is a powerful instru­ment widely used in theoretical and empirical analysis. However, the leading role in this story is not played by utility, as is usual in the traditional reconstructions of historians of economic thought, but by probability.

Uncertainty is in fact a multifaceted concept. It refers to a subjective condition or a mental status of an agent not knowing for certain the consequences of a present or a future event (subjective uncertainty). It refers also to an objective status of things that may results in different outcomes (frequency of occur­rences), or are knowable only through careful measurements subject to errors (objective uncertainty). In order for the modern developments to happen, two conditions were required: both objective and subjective uncertainty needed to be treated with the device of probability. Both these recognitions slowly emerged between the seventeenth and the twentieth centuries.

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Source: Faccarello G., Kurz H.-D.. Handbook on the history of economic analysis. Volume III, Developments in major fields of economics. Edward Elgar,2016. — 659 p. 2016

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