Uncertainty, risk, and the financial crisis of 2008

Stephen C. Nelson, Peter J. Katzenstein

Research output: Contribution to journalArticlepeer-review

131 Scopus citations


The distinction between uncertainty and risk, originally drawn by Frank Knight and John Maynard Keynes in the 1920s, remains fundamentally important today. In the presence of uncertainty, market actors and economic policy-makers substitute other methods of decision making for rational calculation - specifically, actors' decisions are rooted in social conventions. Drawing from innovations in financial markets and deliberations among top American monetary authorities in the years before the 2008 crisis, we show how economic actors and policy-makers live in worlds of risk and uncertainty. In that world social conventions deserve much greater attention than conventional IPE analyses accords them. Such conventions must be part of our toolkit as we seek to understand the preferences and strategies of economic and political actors.

Original languageEnglish (US)
Pages (from-to)361-392
Number of pages32
JournalInternational Organization
Issue number2
StatePublished - 2014

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations
  • Organizational Behavior and Human Resource Management
  • Law


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