Mind Your Decisions
Articles on game theory and personal finance
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How to get straight A’s in college
A lot of people think that to get good grades you have to be a genius or study all the time. But that’s not true. A grade is just a measure of performance–often subjective–in a class. So to get good grades requires the far less impressive skill: being able to perform well in a class. At Stanford, I learned a few tricks to be a better student (I finished with 40 A’s and 3 B’s, for a GPA of 3.97). In the spirit of sharing, here are a few suggestions to get better grades... |
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Game theory in High Stakes Poker
I came across a great hand on the TV show High Stakes Poker. The hand is from Season 3, Episode 12, and it features poker professionals Phil Ivey and Brad Booth (yes, the same Brad Booth who used some psychology and game theory in Poker After Dark). Some background on the hand: Booth had appeared on High Stakes Poker before. This time he bought in for a cool million dollars, hoping to intimidate opponents with a big stack. This is one of Phil Ivey’s first hands on High Stakes Poker and he... |
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Tip to remember rotating credit card rewards
If you’re like me, you have a couple of rewards credit cards. And you try to pick the best card for a given purchase. This used to be easy. Rewards cards used to have fixed rewards categories–like 5 percent cash back on gas and groceries–and you could get in the habit of using the right card. Now some of the big cash back rewards have moved to rotating categories. Discover, Chase, and Citi all offer cards with rotating quarterly (and sometimes monthly) rewards. With rewards changing... |
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Discover Bank savings account: why I don’t trust it
Recently I considered opening an online savings account at Discover Bank. I was intrigued for a couple of reasons. The appeal started with the rate. The savings yield was very competitive and even slightly higher than ING Direct. As of this writing, Discover Bank offers a 1.35% APY versus ING Direct’s 1.10%. And then there was the name. The bank is associated with Discover Financial Services, and it brought to mind the good customer service and great website usability of the Discover credit... |
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How good is your bowling score?
I usually bowl a score around 130, but the other day I hit six strikes and wound up with 215. I took a moment to revel in the high score, but then I got thinking more critically. I was curious about how good the score was in a statistical sense. I was with some math-minded friends and our discussion brought about many questions. How many different bowling games are possible? What’s the average bowling score? How many ways can you attain each bowling score (what is the distribution of bowling... |
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Game theory in Jersey Shore product placement
Product placement gets tricky when a celeb’s behavior sends the wrong image. Handbag companies were not happy to see reality star Snooki on Jersey Shore vomit in their handbags and defile their brands. And so, they fought back in an interesting way. Via NBCPhiladelphia: Well, it ends up that fashion powerhouses like Gucci and Coach have been allegedly sending the “Jersey Shore” train wreck [Snooki] expensive designer bags. The kicker: Coach is not sending [Snooki] Coach bags.... |
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The psychology of spending
Why do we buy things we don’t need? What factors cause us to buy irrationally? These are a couple of the main questions of behavioral economics. Lately I’ve been writing about this topic over at the money site Bundle.com, where I am a community editor. A few of my friends have liked the articles and I figured readers here might appreciate them as well. I’ve tried to cover some of the latest findings on the psychology of spending. Here’s a sampling, and hope you enjoy! How... |
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The world’s dumbest sign?
This one has to be in the running: Photo credit: jurvetson The image inspired many comments on its flickr page, like whether the wires were actually lethal, whether the fine would be levied on surviving family members, and whether the sign was real. Genuine or not, it’s a really funny sign. |
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Game theory in Poker After Dark
There was a hand in the TV show Poker After Dark with some interesting strategy. The hand is from Season 6, Episode 49, and here’s a clip where the hand gets interesting on the river: Youtube video: Poker After Dark hand at 7:52 The action is ultimately between Brad Booth and Erick Lindgren. Booth made trip fours on the river and made a sizable bet. Lindgren faces a decision of what to do. He had flopped top pair of jacks and was ahead most of the hand. He was deciding whether to fold... |
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A clever way to use a ‘worthless’ currency
Foreign investment is a tricky game. Not only must a company profit, it also has to transfer the profits home. Companies have done creative things to convert currency, and my favorite example is Pizza Hut in the former Soviet Union: For example, consider the situation faced by Pizza Hut when it wanted to open a chain of restaurants in the former Soviet Union. The Russian ruble was not convertible, so Pizza Hut could not take the profits from its restaurants out of the Soviet Union in the form... |
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Save on electricity costs by avoiding peak hours
Did you know electricity rates can change during the day, by as much as 40 percent? You might be able to save money by planning when you do laundry or run the dishwasher. As explained on the conEdison website: Energy-conscious customers can save money if you use electricity during off-peak periods when costs are lower. Our Time-of-Use program is designed to encourage customers to reduce electricity use during peak hours. Under the program, you will be charged for electricity depending on when... |
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Game theory in Gattaca
Applying for a job is often a game of signaling. The strategy is to highlight good signals, like grades or references, while downplaying bad signals, like lack of work experience or poor teamwork skills. The trickier part is signals you cannot control like gender, race, and height. It’s nearly impossible to conceal these signals, so you simply let them be, and you hope you get equal opportunity as the law stipulates. But what if all your employer cared about was these genetic traits? What... |
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The game theory of music
Why do we like some music and not others? I learned a lot about this question in the fun read This Is Your Brain on Music by Daniel J. Levitin. One of the parts I found particularly fascinating was an analogy between music and games in terms of complexity/enjoyment: To many adults, Raffi and Barney the Dinosaur are the musical equivalents of tic-tac-toe. When music is too predictable, the outcome too certain, and the “move” from one note or chord to the next contains no element of... |
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The game theory of being a gentleman
At a cocktail party, I got up from the table to grab a finger sandwich. My date said, “Oh, can you grab one for me?” There were turkey and vegetarian options, so I asked, “Which one do you want?” To which she smiled and replied, “Hmm, I don’t know.” And there I was in the classic dilemma of trying to read a woman’s mind. I was expected to make this trivial choice which no doubt would have non-trivial consequences. A true gentleman would know what... |
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The game theory of perfect complements
Can you think of a use for an unpaired left shoe? Off the top of my head, I cannot. A left shoe only has value to me if I have the corresponding right pair. In economics terms, this is because left and right shoes are perfect complements. But I am in fact wrong. An unpaired left shoe does have value. It took a clever businessman in India to discover this, but an unpaired left shoe has value precisely because no one thinks it has value. The application is clever, and I learned about it from a story... |
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A game to make driving safer
This is a very amusing idea to get people to obey the speed limit: Youtube video: speed camera lottery There are similar ideas for recycling and getting people to take the stairs instead of escalators at The Fun Theory website, a viral marketing campaign by Volkswagen. Hat tip: Gamepocalypse now |
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An intriguing gas discount
Mike emails me about a curious promotion and asks me to analyze it: I noticed this interesting discount where a grocery store teamed up with Sunoco to give rewards to frequent shoppers. Here is the link with the details Basically, for each $50 spent at the grocery store, you can redeem for a one-time $0.10 discount per gallon on up to 20 gallons of gas, a potential $2.00 savings. If you spend $200 at the store, you can take $0.40 off per gallon. The question they asked me, and I haven’t been... |
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Credible vs non-credible threat
In game theory, a threat is non-credible if it will never be executed. In real life, things are more nuanced. Len Fisher’s Rock, Paper, Scissors: Game Theory in Everyday Life contains an amusing story in footnote 136 that illustrates: When I was a visitor at a Cambridge college in the United Kingdom, I came across a story…that took place in the Victorian era between a college master and the college chaplain. A discussion had developed over port an walnuts as to whether priests or... |
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The game theory of free drinks
A couple weeks ago, a New York bar had an interesting promotion: From 11pm to midnight every 5th drink each bartender serves will be free. That means if the person before you orders four drinks, you win. Doesn’t matter if it’s top shelf: gratis. (You still have to tip though, you cheap bastards.) All attempts to game the system are welcome. [via Chapman/Chapman] How would you maximize your free drinks? I have yet to work out an optimal strategy, but here are a few of my thoughts. Case 1:... |
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Legopoly
An amusing anecdote from orgtheory.net Some years ago, when they were little kids, my children developed a hybrid game.They’d taken their Monopoly board over to a friend’s house. They’d remembered to bring back the board, but they’d forgotten the houses and hotels. What to do? So, they started to use Lego building blocks in place of the houses and hotels. But, with the Lego pieces offering more affordances, they immediately began to construct ever more elaborate structures. Even when... |