Well, there's the War of the Spanish succession, where the heir to France gave up his position to be the King of Spain.

Sort of. :)

http://en.wikipedia.org/wiki/War_of_the_Spanish_Succession

Based on all these "rational actor" responses, I take it none of you purchase insurance?

Actual rational actors understand that extreme loss has a disproportionate effect. (In other words, losing $100k is more than 1k as expensive as losing $100 for most of us.)

Naive rationality may be easy to analyse but that just means that the GIGO transfer doesn't cost much.

I have car insurance because it is legal mandated. I don't have health or life insurance.

I certainly don't on things I can easily afford to replace.

Only when it's legally/contractually required (car/financed-house), or comes with negotiated discounts (health), or handles a catastrophic/risk-of-ruin situation (chronic disease/business liability).

Insuring against small losses is a net financial loser, or else the insurance company wouldn't offer it.

What about the case for a startup? Say, you raise $500k but you "know" (for the sake of argument) you need a million to make the thing work.

No gamble: 0% chance of success * 53%

Put it all on black: non-zero chance of success * 47%

I don't imagine this would go over very well with investors, though.