HKS Affiliated Authors


Investing in the Unknown and Unknowable. Richard Zeckhauser, 2010, Book Chapter, "David Ricardo made a fortune buying bonds from the British government four days in advance of the Battle of Waterloo. 1 He was not a military analyst, and even if he were, he had no basis to compute the odds of Napoleon's defeat or victory, or hard-to-identify ambiguous outcomes. Thus, he was investing in the unknown and the unknowable. Still, he knew that competition was thin, that the seller was eager, and that his windfall pounds should Napoleon lose would be worth much more than the pounds he'd lose should Napoleon win. Ricardo knew a good bet when he saw it."