What do investor Warren Buffet and legendary economist David Ricardo have in common? They both earned extraordinary returns by investing in the unknown and the unknowable, says 61st Lee Kuan Yew Distinguished Visitor Prof Richard Zeckhauser.
 The Frank P Ramsey Professor of Political Economy at the Kennedy School of Government, Harvard University, was in town as the 61st Lee Kuan Yew Distinguished Visitor. Speaking to a packed audience at his public lecture, "Investing in the Unknown and the Unknowable", at Lecture Theatre 2 on 24 March, Prof Zeckhauser discussed some of the central principles great investors such as Buffet and Ricardo have used to harvest extraordinary returns in situations where the level of uncertainty is beyond that considered in traditional models of finance – situations he calls "the unknown and unknowable", or "UU".
Unknowable events are those that take place suddenly, giving little or no time to anticipate or prepare for, such as the 9/11 terrorist attack or the Asian tsunamis, situations where traditional finance theory does not apply. Clear thinking about such UU situations, which includes prior diagnosis of their elements, and relevant practice with simulated situations, may vastly improve investment decision outcomes, said Prof Zeckhauser.
The frequency and magnitude of UU events is far greater than our news accounts would suggest, so learning to invest more wisely in a UU world may be the most promising way to significantly bolster prosperity.
 Earlier in the day, Prof Zeckhauser, together with Mrs Zeckhauser, a Vice President of Administration at Harvard University, made a courtesy call on NTU President Dr Su Guaning. Prof Zeckhauser also took time to meet with faculty members from the College of Humanities, Arts, & Social Sciences (HASS). Mr Anthony Teo, Secretary to the University; Ambassador Barry Desker, Dean of the S Rajaratnam School of International Studies; Prof Pan Tso-Chien, Dean, College of Engineering; and Prof Schubert Foo, Associate Dean (Acad), HASS, were present at the discussion.
Prof Zeckhauser is an elected fellow of the Econometric Society, the Institute of Medicine (National Academy of Sciences), and the American Academy of Arts and Sciences. He pioneered the field of policy analysis, and is a leading expert on economic behaviour under uncertainty. The author or co-author of 235 articles and 10 books, his current research projects analyse environmental disasters, deception and reputations, trust in Islamic and Western nations, and investing in highly uncertain worlds.
The Lee Kuan Yew Distinguished Visitors Programme invites internationally eminent and outstanding academics and scholars to Singapore as Lee Kuan Yew Distinguished Visitors to make high-level contributions to NTU, the National University of Singapore and to Singapore in general. Launched in January 1985, the programme has invited a total of 61 Distinguished Visitors to Singapore to date.
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