What did you take away from it ? What are you doing differently ? --What I Learnt on Wall Street
Thank you What I Learnt on Wall Street for probing and inspiring this write up. Without which the probability was nil to have gone through this deep dive.
The humorous and embarrassing thing is that at the time I was asked the above questions, I had thought about how interesting Zeckhauser’s article was but had not thought about how to systematically do things differently after enjoying the intellectual high it always gave me each time I read it.
So naturally, the right thing to do was to go back to the paper and read it over again but this time with two things in mind: See if I can teach it through active recall method and secondly to exert deep work on it to annotate what can be systematically extracted and introduced permanently into my analysis process.
For years, I’ve heard Charlie Munger say in Poor Charlie’s Almanac, “The right way to think is how Zeckhauser plays bridge. It’s just that simple.” I’m happy to report that my ignorance state today is far more amplified than the ignorant state you found me in the day you presented me the questions. I never gave it a second thought to ask, who the heck was Zeckhauser, nor did I have any presumptions. It just sounded right, and Zeckhauser was a cool name that went with “…Zeckhauser plays bridge…”
Until a few days back, I neither could tell you who Zeckhauser is nor could I tell you if he was contemporary and alive, or from a past era. So, getting to know Zeckhauser as a professor at the Kennedy School with tremendous contributions to finance, economics was eye opening. Richard Zeckhauser is the Frank Plumpton Ramsey Professor of Political Economy at the Kennedy School, Harvard University. He is a master negotiator. He has won multiple national championships in contract bridge. The world I was diving into was Decision Theory and Behavioral Finance. A world where you have to use Rational Analysis and Learn to think Probabilistically. The two big things that are important when you’re making a decision are your Preferences and your Probabilities.
If you’re like me, you’re going to cherish the work of Zeckhauser for a very long time. You’re going to start to think probabilistically rather than giving one answer to a question. This is going to impact the way you analyze companies and how you determine weighted allocations. It’s going to impact the amount of time you spend on emails and the amount of resources you invest proportionally on ideas. Your estimation of time, your expectations of people and investments. “The right way to think is how Zeckhauser plays bridge. It’s just that simple.” Continue reading “A Review of Richard Zeckhauser’s (2006) Investing in the Unknown and Unknowable (UU)”