Masterspeak

"Most successful investments are where the odds are against you

Richard Zeckhauser, professor of political economy, Harvard Kennedy School

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Published 9 years ago on Feb 02, 2013 12 minutes Read
Benjamin Cooper

champion Bridge player and the Frank Ramsey professor of political economy at Harvard University, Richard Zeckhauser calculates probabilities for everything that moves. So much so, that when we call to tell him that we might be about 10 minutes late for our 4 pm meeting at the Harvard Kennedy School campus in Boston due to an unexpected traffic jam caused by the construction work just across Charles River, he immediately begins calculating the probability of us calling him a second time to tell him that we would reach later than the anticipated 10 minutes. That’s the first thing that he tells us as we rush in to his office and apologise. “I put a low probability to it as you would have been too embarrassed to call about being delayed again.” Zeckhauser says calculating probabilities should become second nature and doing so would help improve our quality of business decisions immensely. As our meeting starts, he reminds us that his wife is scheduled to pick him up for a doctor’s appointment at 5 pm. As an afterthought he goes, “I think there is an 60% chance that while getting here she will get caught in the same traffic conditions as you guys, as she is driving over from this side of the river, too. That means we should have an additional 10 to 15 minutes.” Point made.