The discovery of discontinuities in the economy made it perilous to base decisions on trends and extrapolation of past data. The exploration of uncertainty moved the discussion and research from the mathematicians to the economists. At the bottom of the uncertainty problem in economics is the forward-looking character of the economic process itself. The latter are uncertainties. The book describes several new theories that give more meaning to uncertainty.
Game theory states that the true source of uncertainty lies in the possible actions of others.
Prospect theory explained the asymmetric behavior patterns of individuals between gains and losses. Without any theoretical structure to explain why patterns seem to repeat themselves across time or across systems, these innovations provide little assurance that today's signals will trigger tomorrow's events. Bernstein's book increases our understanding of the sources of the risk assessment and risk management techniques we use today. The difficulties in measuring the unknown have vexed managers for hundreds of years. Advances in probability theory and progress in understanding uncertainty have been useful tools to manage risk, but the story is not over.