<p>This paper critiques the dominance of the precautionary principle (PP) in shaping global regulation of generative artificial intelligence (GenAI), arguing that its bias toward risk aversion suppresses innovation and entrepreneurial discovery. While Austrian economists have traditionally resisted regulatory engagement, this paper advances a second-best approach that accepts regulation as inevitable and seeks to shape it in ways consistent with Austrian insights. Drawing on Israel Kirzner’s framework of regulatory perils, the paper develops an Austrian-friendly regulatory agenda rooted in robust political economy. This agenda includes rebuttable presumptions of non-intervention, red teaming, sunset clauses, and soft-law alternatives aimed at preserving decentralized experimentation under uncertainty. Rather than retreating to idealized laissez-faire, the paper offers a pragmatic path for engaging with policymakers to ensure that regulation of GenAI remains adaptive, knowledge-sensitive, and discovery-compatible. By reframing Austrian economics as a contributor to governance under radical ignorance, the paper provides both a critique of current AI regulatory trends and a constructive alternative grounded in the Austrian tradition.</p>