In this case, the Knighian uncertainty cancels out
Does it? You still know that you will only be able to take one of the two bets; you just don’t know which one. The Knightian uncertainty only cancels out if you know you can take both bets.
Does it? You still know that you will only be able to take one of the two bets; you just don’t know which one. The Knightian uncertainty only cancels out if you know you can take both bets.