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The authors of this paper set out to answer the question of whether Keynes’s logical theory of probability had an impact on his own economic thinking. The authors review criticisms that had been expressed previously; then, with regard to the applicability of the classical concept of probability to economics, they introduce the foundations of Keynes’s logical theory of probability and the difficulties involved in its practical application. This is followed by an examination – within the Keynesian conceptual framework – of the role of uncertainty. The next sections are given over to an analysis of the role of “animal spirits”, and of expectations, with a discussion of investment decisions made from positions of uncertainty. This train of thought focuses on the dilemma of whether there was continuity or a break, over time, in the role of probability in economics within the Keynesian conceptual framework. After this, the authors outline the competing 20th century interpretations of probability embodied by the rearticulated version of relative frequency theory on the one hand, and the evolution of probability theory outside the economics paradigm on the other. The authors conclude with their assertation that probability theory did have a considerable impact on Keynes’s thinking on economic theory. JEL codes: D81, D84, D92

Logical probability, uncertainty, investment decisions - Did Keynes’s logical theory of probability have impact on economic thinking?