Speaker 1: Pushkin. Hello and welcome to another episode of Cautionary Questions,
Speaker 1: where I team up with clever people to answer your
Speaker 1: clever questions. And this time I'm joined by Nate Silver
Speaker 1: and Maria Konnikova. They are the hosts of the Risky
Speaker 1: Business podcast and they are here to answer questions from
Speaker 1: both sets of listeners. Nate is a political analyst. He's
Speaker 1: the author of On the Edge, and Maria is the
Speaker 1: best selling author of the Biggest Bluff How I Learned
Speaker 1: to Pay Attention, Master Myself and win both fantastic books.
Speaker 1: Both Nate and Maria are also journalists, and they are
Speaker 1: both high stakes poker players. I'm a journalist too, and
Speaker 1: an undercover economist, and I'm not much of a poker player.
Speaker 1: But between us we should have some good answers for
Speaker 1: all of the smart questions that you've been sending in.
Speaker 1: We will be tackling smartphones in schools, tariffs, and how
Speaker 1: to use game theory to win its sports. Nate, Maria,
Speaker 1: Welcome to Cause Me Tales. Thank you, Tim, Thanks so much.
Speaker 2: Tim.
Speaker 1: Well, should it be Causme Business or Risky Tales?
Speaker 3: Risky, risky caution.
Speaker 2: Risky caution. That's good that's good.
Speaker 1: You've been podcasting for how long?
Speaker 2: About a year?
Speaker 3: About a year?
Speaker 4: Yeah, we're coming up on the World Series of Poker
Speaker 4: begins in every May, and so yeah, we launched it
Speaker 4: just about a year ago and we're coming up in
Speaker 4: our second World Series season.
Speaker 1: Excellent.
Speaker 2: When Nate and I are both at the final table
Speaker 2: of the main event, that'll be really great for our
Speaker 2: risky business podcast audience growth.
Speaker 1: Would you be podcasting from the World Series if you're
Speaker 1: on the final table?
Speaker 2: Not at the final table since there are no phones allowed.
Speaker 1: But we'll find a way.
Speaker 4: I mean, we do have these long days right where
Speaker 4: we both have real jobs and then maybe you'll do
Speaker 4: several hours of real work quote unquote, and then play
Speaker 4: poker for twelve hours and then it's fine your two
Speaker 4: am Mexican food.
Speaker 3: Hangout or something. But there are long days. We do
Speaker 3: not get vacation when we're in Vegas.
Speaker 1: Basically we do not right enough poker chat. Let us
Speaker 1: get into the virtual postbag. After we listened to the
Speaker 1: theme music for Cautionary Tales, I am here with Nate
Speaker 1: Silva and Maria Konikova, and here is a good question
Speaker 1: to start with from listener Alex. Alex asks have any
Speaker 1: personal experiences or academic theories really shaped your decision making.
Speaker 1: Let me put this one to Nate first, and I'd
Speaker 1: love to hear what both of you think.
Speaker 4: I would say my experience with risk taking and decision
Speaker 4: making is very hands on for the most part. Right
Speaker 4: when I was a kid, we would play fantasy baseball
Speaker 4: and have little NFL betting pools and things like that. Obviously,
Speaker 4: poker there's good instructural material, but you know, most people
Speaker 4: are ultimately kind of largely self taught, you know, in
Speaker 4: my book On the Edge, then game theory plays a
Speaker 4: really large role, and game theory plays a very large
Speaker 4: role in poker. There are now computer programs called solvers
Speaker 4: that literally have solved the Nash equilibrium for poker. If
Speaker 4: you've seen a beautiful mind. A lot of things in
Speaker 4: life is like what's the game theory equilibrium of, Like
Speaker 4: what traffic patterns look like in New York, or how
Speaker 4: often you should eat one type of cuisine versus another,
Speaker 4: or any type of competitive situation where there are lots
Speaker 4: of optionality. I'd say game theory is kind of the
Speaker 4: most important variable there.
Speaker 1: In game theory, we should say is really the use
Speaker 1: of mathematical equations to model strategic into actions. So a
Speaker 1: very simple example of game theory is the game of rock,
Speaker 1: paper scissors. Now, if I play rock, you're going to
Speaker 1: play paper and beat me. If I play paper, you're
Speaker 1: going to play scissors and beat me. And so game
Speaker 1: theory says, oh, you have to randomize, you have to
Speaker 1: have a one third chance of playing each strategy. I mean,
Speaker 1: that's kind of obvious. Game theory can be used to
Speaker 1: model much more complex situations, including famously, because it inspired
Speaker 1: one of the creators of game theory, Poker.
Speaker 2: Yeah, I would second Nate on game theory. It was
Speaker 2: one of the pinnacles of my academic work. And I'd
Speaker 2: also say the psychological theories of Danny Carneman have been
Speaker 2: hugely influential in how I think about decision making. He
Speaker 2: was an absolutely brilliant man who really unearthed a lot
Speaker 2: of the ways that our brains misprocess. I don't think
Speaker 2: that's a word, but I'm going to make it one
Speaker 2: miss process information and the biases and heuristics that were
Speaker 2: up against. And it's incredibly powerful because even if you
Speaker 2: know that those biases and heuristics exist in theory in practice,
Speaker 2: you still exhibit them, right. You have the game theory
Speaker 2: kind of that mathematical side, and then the psychological side
Speaker 2: of conoment and poker, in my mind is the life
Speaker 2: experience that has cemented these more than anything else in
Speaker 2: my brain and has made me internalize how this actually
Speaker 2: works in reality and how you can try to decide
Speaker 2: optimally and then take that from the poker table to
Speaker 2: real life, because poker's an environment where you can really
Speaker 2: sample thousands of thousands and thousands of decisions, sample correctly,
Speaker 2: and as you know, Tim, that's incredibly important when it
Speaker 2: comes to learning and trying to get a sense of probabilities,
Speaker 2: and in real life, not the poker table, we never
Speaker 2: sample correctly, right, So that's where a lot of these
Speaker 2: biases come from. So I think poker is a very
Speaker 2: powerful teaching tool to help cement these theories into practice.
Speaker 1: Okay, I've got a great question from Drew Loyal listeners
Speaker 1: to caution me tales. Now, I'm a big fan of
Speaker 1: board games, and Drew wants to know Maria and Nate
Speaker 1: do you play board games. If you play board games,
Speaker 1: do you bring a poker lens to the table or
Speaker 1: is it a different vibe.
Speaker 2: So I hate board games. I do not play board games.
Speaker 2: My sister is a little over six years older than
Speaker 2: I am, and she always loved board games. They bored me, haha.
Speaker 2: They're just not interesting. And you know when someone brings out,
Speaker 2: you know, sellers of Katan or anything like that, I'm like,
Speaker 2: oh God, no, no, no, no, please Ticket to Ride
Speaker 2: as a favorite in my family, and i just want
Speaker 2: to die, you know, for me. If there's game night,
Speaker 2: please let it be poker. Otherwise, please don't make me play,
Speaker 2: and let me read my book on the side and
Speaker 2: cheer you on while you play.
Speaker 3: Yeah.
Speaker 4: I mean, look, some of the games get quite advanced,
Speaker 4: and so it's like, where do you go from a
Speaker 4: game that takes ten hours to learn something that's kind
Speaker 4: of a broken, overly simple game. Right, But like, yeah,
Speaker 4: I like games because I'm very competitive. Right, if I'm playing,
Speaker 4: it's like, oh, people, we're like, don't have that background
Speaker 4: in games or poker.
Speaker 3: Then I'm just gonna be honest. I tend to. I
Speaker 3: tend to figure out the strategy pretty quick. And when you.
Speaker 2: Crush them, Nate, you crush their souls and their dreams,
Speaker 2: and they wish they'd never asked you to play Nate.
Speaker 2: To your point about the complexity, There's a New Yorker
Speaker 2: cartoon that I absolutely love and it's a group of
Speaker 2: people sitting around a table and one of them is
Speaker 2: reading a game instruction manual and the rest of them
Speaker 2: are all skeletons. He says, and so those are the rules?
Speaker 2: Shall we start playing?
Speaker 3: I love it.
Speaker 1: I had the privilege of interviewing Klaus Touber, the creator
Speaker 1: of Settlers of Katan, and he said something that really
Speaker 1: stuck with me, which I suspect will resonate with you
Speaker 1: poker players. He said, you can know somebody their whole
Speaker 1: lives and play a game with them, and you will
Speaker 1: see something that you've never seen that's wonderful.
Speaker 2: And I actually that's how I feel about Poke. Your
Speaker 2: character comes out. And by the way, I do have
Speaker 2: a very strong interest in games for my next book
Speaker 2: when it comes to cheating, so I'm interested in, like,
Speaker 2: what kind of a person you know cheats some monopoly
Speaker 2: at home.
Speaker 1: Game night, people who want to win.
Speaker 2: It's just totally like mind boggling to me that you
Speaker 2: would that you would do that, but but but there
Speaker 2: you have it.
Speaker 4: Yeah, my partner is also very competitive, but his main
Speaker 4: objective is making sure that I don't win. Right, he
Speaker 4: will go out, You'll go out of his way to
Speaker 4: lose himself if it's a murder suicide mission basically, which
Speaker 4: changes the strategy quite a bit.
Speaker 1: I feel seen that's amazing.
Speaker 4: So here's one for you, Tim. This question is from
Speaker 4: Carrie k E r ri I E. I know it's
Speaker 4: Irish or something, Carrie, but anyway, Hi Tim and team.
Speaker 4: I worrer that a big problem with the productivity gap
Speaker 4: in the UK is a lack of high quality data
Speaker 4: and data driven decision making. I see a lot of
Speaker 4: investment in data that is overseen by technical experts in
Speaker 4: a given domain, but very little consultation of data scientists.
Speaker 4: Company and organizational boards also seem to like the sort
Speaker 4: of expertise which is often rolled into a catch all
Speaker 4: it function. I work in the public sector and so
Speaker 4: I have framed my question accordingly. Should we have a
Speaker 4: government department devoted to data or is it all a
Speaker 4: bit nineteen eighty four.
Speaker 3: Best wishes Carrie Well.
Speaker 1: I love the question, and we do kind of have
Speaker 1: a government department devoted to data. It's called the Office
Speaker 1: for National statistics, but it's focused on very old school
Speaker 1: statistics rather than modern data science, and old school statistics
Speaker 1: tends to focus on smaller data sets, very well behaved,
Speaker 1: well formatted data sets. For example, you might go out
Speaker 1: and do a survey rather than just say, hey, well,
Speaker 1: we're going to just draw administrative data, or we're going
Speaker 1: to look at data that's coming out of people's smartphones,
Speaker 1: which you know, there's a lot more information in there,
Speaker 1: but it's a lot messier, to be honest. What really
Speaker 1: concerns me at the moment is that data is systematically
Speaker 1: underrated by governments. I think they don't realize how powerful
Speaker 1: it can be, that they don't realize how dangerous it
Speaker 1: can be, and it tends to be given a low
Speaker 1: political priority or misused. So at the moment in the US,
Speaker 1: for example, we've got this sort of sudden disappearance of
Speaker 1: all these government websites. It's unclear how much data has
Speaker 1: permanently disappeared, or is it just that it's temporarily gone down.
Speaker 1: Is somebody archiving it? Will the archives work or not?
Speaker 1: Archives don't always work. Are we going to have interrupted
Speaker 1: data sets? It's very unclear what's gone and what hasn't.
Speaker 1: So that's a particularly extreme example, but generally, I'm working
Speaker 1: on a history of data at the moment. It's so powerful,
Speaker 1: it's so important. It is the foundation of our health systems,
Speaker 1: it's the foundation of many of our economic activities. It's
Speaker 1: the foundation of science. It's also the foundation of some
Speaker 1: terrible abuses of human rights in the past. And yet
Speaker 1: it's kind of boring and it's kind of geeky, and
Speaker 1: so it just gets overlooked, and that's what really worries me.
Speaker 4: Yeah, I mean, it's interesting that you have, you know,
Speaker 4: one partisan faction in the US that seems to think that.
Speaker 3: Less data is better instead of having better data.
Speaker 2: Right.
Speaker 4: And some types of data you can go back and recollect,
Speaker 4: but some things you can't.
Speaker 3: Right.
Speaker 4: The UK, for example, has a data set of economic
Speaker 4: statistics like GDP that goes back like almost a thousand
Speaker 4: years or something, right, because they were collecting records for
Speaker 4: tax purposes and estate purposes and everything in real time.
Speaker 1: Yeah. Well, we call the doom Doomsday Book eighty six.
Speaker 1: I'm old enough to remember the nine hundredth anniversary of
Speaker 1: the Doomsday Book. There's an interesting little caution retail there.
Speaker 1: So for the nine hundredth anniversary of the Doomsday Book,
Speaker 1: which was in nineteen eighty six, the BBC organized this
Speaker 1: kind of a proto Wikipedia. They said, we're going to
Speaker 1: encourage this project where school kids across the country are
Speaker 1: going to act as citizen journalists. They're going to go around,
Speaker 1: they'll interview people, they'll gather data, they'll write little essays.
Speaker 1: We've got maps, we'll have photographs, and we'll put it
Speaker 1: all on a laser disc remember laser disks. Well, you
Speaker 1: can see the problem, right, and we've got these highly sophisticated,
Speaker 1: expensive computer systems. They're going to be accessible in every school.
Speaker 1: And it was called Doomsday nineteen eighty six. I think
Speaker 1: it was super cool. I remember it really well. And
Speaker 1: then by about nineteen ninety eight it was just impossible
Speaker 1: to even read the laser discs. So this whole project
Speaker 1: just went offline. Meanwhile, by the way, the original Doomsday
Speaker 1: Books from ten eighty six still available.
Speaker 2: Paper has a certain appeal and has lasted four centuries
Speaker 2: for a reason, you know, the flip side term of
Speaker 2: what you were saying about what's happening in the US,
Speaker 2: and kind to address the nineteen eighty four element of
Speaker 2: the question is so, you know, yes, a lot of
Speaker 2: data is disappearing, and then data that was never meant
Speaker 2: to be aggregated and linked and personalized is being shared,
Speaker 2: and profiles of people of US citizens and non citizens
Speaker 2: are being created that should have never been created. Right.
Speaker 2: There were rules in place to keep those data sets
Speaker 2: separate for a reason for privacy protections, and now the
Speaker 2: government is trying to roll back those rules and collect
Speaker 2: and de anonymize the data that was shared by people
Speaker 2: with the assumption that that would never happen. That's really bad, right,
Speaker 2: So there's this kind of dystopian thing going.
Speaker 1: On, and there's history here. I mean, this has happened before.
Speaker 1: This happened in the nineteen forties.
Speaker 2: It's not good. Nineteen forties was not a good time
Speaker 2: in history if people remember.
Speaker 1: No, I think we can all agree on that one.
Speaker 1: Thank you very much, Nate and Maria. We will be
Speaker 1: answering more of your questions after this shortbreak. We are back.
Speaker 1: I'm here with Nate Silver and Maria Konikova of Risky Business,
Speaker 1: and we have an interesting question from a Risky Business
Speaker 1: listener who asks one thing that happened during the tariffs
Speaker 1: which didn't get much attention is the ten year treasury
Speaker 1: rate spiked from four to four and a half percent?
Speaker 1: I should say, by the way I work for the
Speaker 1: Financial Times, we were paying a lot of attention to that,
Speaker 1: but understand that outside geek land it was ignored. That
Speaker 1: basically means, the listener continues, there is less belief that
Speaker 1: US debt is a safe bet. It probably means somebody
Speaker 1: cough China, cough, issued a cell order for a large
Speaker 1: amount of US treasury with the intent to move the
Speaker 1: interest rate as retaliation for tariffs. To cut to the chase,
Speaker 1: the listener asks, I would be extremely interested in hearing
Speaker 1: what are your thoughts on the likelihood of the United
Speaker 1: States defaulting?
Speaker 2: Nate, This one's here.
Speaker 4: I used to know more about credit default swaps and
Speaker 4: things like this. I mean, look, the US runs up
Speaker 4: very large deficits. Neither party has any interest in doing
Speaker 4: what it would take to cut those deficits potentially. Right,
Speaker 4: we got lucky and kind of the financial crisis in
Speaker 4: COVID era of lower interest rates where you can borrow
Speaker 4: very cheaply.
Speaker 3: It's no longer true now.
Speaker 4: In fact, borrowing he's getting more expensive, and so you know,
Speaker 4: I trust the market's fairly efficient here. But I guess
Speaker 4: the US is still a bit too big to fail.
Speaker 1: Well, normally, when we say too big to fail, we're
Speaker 1: referring to things that the US is going to bail
Speaker 1: out if necessary. Right, Yeah, so the US is too
Speaker 1: big to save, that's your problem.
Speaker 4: You know, the world has profoundly been affected by Trump's
Speaker 4: second term in a way it wasn't in Trump's first term.
Speaker 4: Our neighbors to the north, Canada had an election that
Speaker 4: was entirely upended. The Liberals want to back in power,
Speaker 4: even though Trudeau had been very unpopular.
Speaker 3: Right, I would argue.
Speaker 4: That the election of the new pope was in part
Speaker 4: a response to Trump and the changing geopolitical world, right,
Speaker 4: and say, okay, we want to have some influence on
Speaker 4: the United States. Have figure who's not Trump. It can
Speaker 4: balance them out somehow, And so yeah, we're we're a
Speaker 4: different world. And I suppose I trust markets and investors
Speaker 4: are intelligent about that. And I'm not sure it's China
Speaker 4: so much as the fact that we're in a new regime.
Speaker 1: Yeah, I certainly agree. I don't think China needed to
Speaker 1: do anything to make the US Treasury rate spike when
Speaker 1: the rate spikes. By the way, it means people are
Speaker 1: selling US government debt. When they sell it, the price
Speaker 1: goes down, the interest rates goes up. But yeah, plenty
Speaker 1: of people willing to do that without any coordinated action
Speaker 1: from China. I mean, there was absolutely zero need for
Speaker 1: the US government to default, because the US government can
Speaker 1: always print more to all US. I mean, it could
Speaker 1: be the US government debt gets less attractive, it could
Speaker 1: be that inflation takes off, it could be their all
Speaker 1: kinds of problems, but there's never a need to default.
Speaker 1: I think the decision to default would be just that.
Speaker 1: It would be a decision the US government would have
Speaker 1: to actively decide we want to stiff our creditors. So
Speaker 1: you just have to look at the presidents and say,
Speaker 1: because this looked like a man who stiffs's credits, I
Speaker 1: don't think so. I don't think so. He doesn't sound
Speaker 1: like Donald J. Trump. To me, this is President Trump,
Speaker 1: which talking aim in the ft. We have a new acronym.
Speaker 1: It's Taco. Taco stands for Trump always chickens out. So
Speaker 1: the bet is that he will not in fact default,
Speaker 1: even though he's talking about various things that already look
Speaker 1: like default. Because the consequences would be so catastrophic that
Speaker 1: he would look at the consequences and he would back away.
Speaker 1: But that doesn't mean that he couldn't do some damage.
Speaker 1: So fingers crossed, all right.
Speaker 2: So listener Jack wants us to explore the thorny issue
Speaker 2: of cell phones in school and writes, Australia has been
Speaker 2: running an experiment with New South Wales banning mobile phone
Speaker 2: use in our schools from October twenty twenty three. This
Speaker 2: is following the implementation of a ban in Victoria in
Speaker 2: twenty twenty which itself cites research from England and other justifications.
Speaker 2: So this listener has kids in school. This is not
Speaker 2: where I thought the question was going to go. Actively
Speaker 2: helps the fourteen year old subvert this ban, so they
Speaker 2: have an old phone and a locked pouch and their
Speaker 2: actual phone in their bag. This is because they must
Speaker 2: use their phone to hot spot the internet to their laptop.
Speaker 2: Jack writes, My opinion is the whole thing as stupid,
Speaker 2: as most kids have some kind of workaround and are
Speaker 2: on their laptops all day anyway, If parents are on
Speaker 2: their phones all the time, why are we expecting kids
Speaker 2: not to be? I still see teachers in playgrounds, face
Speaker 2: and phone, and all the injustices and hypocrisy of my
Speaker 2: own school days come flooding back. I mean, I know
Speaker 2: I'm asking this question. I have so many thoughts, but
Speaker 2: I'll open it up to you guys first.
Speaker 1: I also have thoughts. I think the hypocrisy thought is real.
Speaker 1: I have three children myself. My oldest child is twenty one,
Speaker 1: the youngest is thirteen. They see me being distracted by
Speaker 1: my phone all the time, and of course they're going
Speaker 1: to be influenced by that. I think that this is
Speaker 1: an evil device, useful but evil that we all of
Speaker 1: us need to fight together because it's capable of ruining
Speaker 1: all of our lives. I feel like I should set
Speaker 1: a good example, and I don't feel that the fact
Speaker 1: that the grown ups are being distracted by the phones
Speaker 1: is particularly a good reason to say the kids should
Speaker 1: have the phones too. I mean, we would never say, hey,
Speaker 1: I see the grown ups drinking vodka and smoking, so
Speaker 1: why surely it's fine for the nine year olds to
Speaker 1: also drink vodka and smoke. I mean, I don't think
Speaker 1: that follows, but it's hypocritical.
Speaker 2: Term. It's hypocritical that you do not like your child.
Speaker 1: Yeah, it will. I think it suggests that maybe the
Speaker 1: grown up shouldn't bring so much vodka and shouldn't smoke
Speaker 1: so much, rather than the other way around. But anyway, yeah,
Speaker 1: we are setting an example, whether we like it or not.
Speaker 2: I completely agree with that, and to add to it,
Speaker 2: the use of screens in general, it's very different depending
Speaker 2: on your age. There's emerging research, but now we have
Speaker 2: a few decades worth of what phones do to developing
Speaker 2: brains and kind of the habits that you create from
Speaker 2: a young age. So being on the phone as an
Speaker 2: adult who grew up without that kind of access is
Speaker 2: very different from growing up and actually constantly being connected
Speaker 2: to a scream. By the way, there's also research that
Speaker 2: shows that taking notes by hand is much more powerful
Speaker 2: than taking notes on a laptop. Right. You retain more information,
Speaker 2: you learn better because there's a brain link between the
Speaker 2: hand and the brain that does not exist when you're typing.
Speaker 2: It would be better. I totally agree with you, Tim,
Speaker 2: Adults should be on their phones much less than I
Speaker 2: write about this. I think it's actually really great practice
Speaker 2: to not have your phone. I've sometimes left my phone
Speaker 2: at home on purpose to kind of have a day
Speaker 2: without cell phones. I have programs that turn the Internet
Speaker 2: off on my computer because I lack willpower if I don't,
Speaker 2: forcibly kind of have it turned off to try to
Speaker 2: have some deep concentration, deep writing time. This is all
Speaker 2: kind of related to our executive function, our self control ability,
Speaker 2: our ability to learn, our memory. All of these things
Speaker 2: are interconnected. And don't you want your child to actually
Speaker 2: emerge as a kind of smart adult who's capable of
Speaker 2: all of these things as opposed to someone who is
Speaker 2: constantly distracted.
Speaker 1: Nate strikes me as the three screens. It won'ts going
Speaker 1: Nate anything.
Speaker 2: You know.
Speaker 3: I just have my laptops.
Speaker 4: If people think I have some big elaborate mode or
Speaker 4: set up, I just have my little laptop. Actually, yeah, look,
Speaker 4: is it paternalistic to tell kids they can't use their phones?
Speaker 3: I mean, yeah, but they're.
Speaker 4: Kids, right, so you're allowed, You're allowed to be paternalistic
Speaker 4: toward them.
Speaker 3: And I don't know, I mean, I guess the one
Speaker 3: caveat I have is I.
Speaker 4: Was chronically pretty bored in school, right, and so I'm
Speaker 4: sympathetic to the kids that are like, Okay, I'm bored.
Speaker 4: I'm learning things I already know, but like it is
Speaker 4: a situation where I think you have to have some
Speaker 4: type of consistent enforcement in the rules. But when you're
Speaker 4: in school, or blame your teacher snap making you're interested,
Speaker 4: but don't blame them for outletting you be on Instagram
Speaker 4: while you're supposed to be learning algebra.
Speaker 1: I think it might also be a collective action problem. Yes,
Speaker 1: so I think it's perfectly possible that you've got teenagers
Speaker 1: who would be quite happy if nobody in the school
Speaker 1: had Instagram or nobody had Snapchat. But if other people
Speaker 1: are using Snapchat to communicate, to arrange to meet up,
Speaker 1: well then I need Snapchat too. And just talking to teenagers,
Speaker 1: I think that viewpoint is not unusual. Some of them
Speaker 1: are like, please, can you just ban everybody from using
Speaker 1: it and then I'll be happy? Yeah, Okay, let's move
Speaker 1: on because I've got I've got a question specifically from
Speaker 1: Maria from a long long time listener from Quebec. They
Speaker 1: would like to hear Maria talk about a particular point
Speaker 1: of her book, The Biggest Bluff, where she describes the
Speaker 1: breakfast she had with her mentor you were trying to
Speaker 1: find somebody who would teach her to play poker, so
Speaker 1: that you could write a book about learning to play poker.
Speaker 1: He only became interested when he realized, you don't know
Speaker 1: anything at all about the subject. You don't even know
Speaker 1: how a deck of cards works. And our listener says,
Speaker 1: I'm sixty five years old and I went through a
Speaker 1: couple of career changes, and I find this story very
Speaker 1: moving and so true that what it means to learn
Speaker 1: something and to teach something. So what are your thoughts
Speaker 1: on that?
Speaker 2: Yeah? I think so. This conversation took place the first
Speaker 2: time I ever met Eric Sidell, who is a legend
Speaker 2: of the poker world, and he had never taken on
Speaker 2: a poker student before. And what stood out about me
Speaker 2: was that I was a complete blank slate. I didn't
Speaker 2: have any bad habits. I didn't have any habits, right,
Speaker 2: I didn't know anything. And so for him, I think
Speaker 2: it was a very interesting experiment, just like for me,
Speaker 2: it was an interesting experiment from scratch. You know, what
Speaker 2: can he do with me? Given my background in psychology
Speaker 2: in a short period of time these days, when you know,
Speaker 2: we've got all these math wizards and selvers and all
Speaker 2: of these things, is kind of psychology hard work. Kind
Speaker 2: of my background is it enough, right? Could I do well?
Speaker 2: And so if I could, that would be an amazing
Speaker 2: kind of proof of concept for the way that he
Speaker 2: thinks about the game. And so I think to him,
Speaker 2: that's what made this interesting and that's what made it
Speaker 2: appealing Nate.
Speaker 1: Why is Maria so good at poker? Is it the coach?
Speaker 1: Is it her training as a psychologist? Is it something else?
Speaker 4: I think it's her and not the coaching, although Maria
Speaker 4: is a wonderfully well connected person who has access to
Speaker 4: some of the best poker minds in the world. But yeah, look,
Speaker 4: it's the balance of the people reading skills and the
Speaker 4: mathematical skills and the discipline. Really, you know, it's rare
Speaker 4: to see Maria tilt. I'm sure she does it right,
Speaker 4: but I think she is playing more than I am.
Speaker 1: Frankly, Tilting is basically where you get emotional and it
Speaker 1: affects your decisions.
Speaker 3: Tilt doesn't have to be anger, right.
Speaker 4: It can be like, oh, I've had a great day,
Speaker 4: so I'm gonna not fight for this plot that you're
Speaker 4: supposed to bluff everything. It can be a lot of
Speaker 4: different formats of it. But like you know, we know,
Speaker 4: one always plays their a game, right, But if you're
Speaker 4: always playing your B plus game or better, and you're
Speaker 4: really smart in lots of different ways and read people
Speaker 4: well and maybe defy stereotypes a little bit too, maybe
Speaker 4: are more aggressive than people are expecting. So yeah, I
Speaker 4: would say she's a well rounded poker player. By the way,
Speaker 4: It's part of like learning the game later is that
Speaker 4: you might wind up being a little bit more well rounded.
Speaker 4: When I used to play for a living back god
Speaker 4: twenty years ago, now I'm getting old. I played a
Speaker 4: game called Limit Hold Them, which the same amounts bet
Speaker 4: on every hand, or as a no limit, you can
Speaker 4: be anywhere from one chip to the entire size of
Speaker 4: your stack, and it's a much different game, And so
Speaker 4: I had to spend a lot of time unlearning habits
Speaker 4: from Limit Hold Them, which can be bad habits in
Speaker 4: No Limit Hold Them.
Speaker 1: We've got more questions coming up, but first let's take
Speaker 1: a quick break. Welcome back to cool SHM Questions with
Speaker 1: me Tim Haffort.
Speaker 2: And me Maria Konakova and me Nate Silver.
Speaker 4: So here's a question from Mark. Mark asks, it's no
Speaker 4: secret that political donations are tied to political favors, legislation
Speaker 4: benefiting the highest owners and so forth. If the politicians
Speaker 4: are the machine, and the machine runs on money, what
Speaker 4: if we tweaked the source of the money. What would
Speaker 4: happen if, by some stroke of magic, Congress received vastly
Speaker 4: larger salaries, increasing with years of service. But with one
Speaker 4: big caveat, politicians cannot accept any donations, gifts, speaking, fees,
Speaker 4: or favors in any form other than direct money donations
Speaker 4: from constituents up to the federal limits without forfeiting their
Speaker 4: public service salary. So put, simply, what if public service
Speaker 4: was the bigger, more valuable incentive, could it even outcompete
Speaker 4: the current incentives? Would governing change.
Speaker 3: For the better or fur the worse? And why?
Speaker 2: I like Kate, you know, it's a good question, but
Speaker 2: it's slightly naive in the sense that we already have
Speaker 2: rules against politicians accepting all sorts of things that Mark
Speaker 2: wants them not to accept. And there are ways around them,
Speaker 2: right There are packs which are political action committees which
Speaker 2: you can donate to. There's ways that you can lobby
Speaker 2: and influence people. People would get around these incentives very easily,
Speaker 2: just like they do today.
Speaker 1: This maybe is a naive observation but I would have
Speaker 1: thought there was a difference between donations to a campaign
Speaker 1: for the purposes of spending money on adverts to get
Speaker 1: reelected versus just donations to a politicians bank account. There
Speaker 1: should be a bright line between the two of them.
Speaker 1: I mean, Nate, you're the experts on this.
Speaker 3: The answers.
Speaker 4: You are supposed to report to the Federal Election Commission
Speaker 4: every dollar that you spend, so you definitely run a
Speaker 4: risk of expenses being scrutinized if they're not legitimate. But
Speaker 4: of course there are a million things a tranch of
Speaker 4: expenses that are ambiguous between personal and business expenses.
Speaker 3: Right.
Speaker 4: You can also shuffle money to consultants and pay them
Speaker 4: maybe more than their worth, in exchange for who knows
Speaker 4: favors later on and so forth. I think it's probably
Speaker 4: a good idea to pay members.
Speaker 3: Of Congress more.
Speaker 4: I think it might help recruit some people who are
Speaker 4: not already wealthy to enter Congress. I think in general,
Speaker 4: top performing government employees should be paid more too, and
Speaker 4: make it easier made to fire the poor performers.
Speaker 3: I don't know.
Speaker 4: I don't understand when we want to go into politics.
Speaker 4: It sounds like miserable to me to be a member
Speaker 4: of Congress. My lizard brain can't grock those incentives.
Speaker 1: Necessarily, it is worth directing some attention to politicians' latitude
Speaker 1: to do things that people might want to bribe them
Speaker 1: to do. So the more personal discuestion a politician has,
Speaker 1: the more it's worth bribing them. So one of the
Speaker 1: interesting things about tariffs is that if you put a
Speaker 1: large tariff on importers, it's then worth a great deal
Speaker 1: of money to particular importers to be exempt from that tariff.
Speaker 1: I mean, it keeps changing, but there was this huge
Speaker 1: tariff on electronic goods coming from China, and then it's like, oh, actually,
Speaker 1: you know, we're not going to levy that on iPhones.
Speaker 1: So Apple benefits from that. And I'm not saying, oh,
Speaker 1: Apple bribed the president. I don't have any particular reasons
Speaker 1: to believe they did. But the point is that when
Speaker 1: you've got that sort of personal discression, it becomes hugely valuable,
Speaker 1: and those interest groups are willing to pay a lot
Speaker 1: of money, and so there's the temptation for bribery.
Speaker 2: One of the big differences between first world and third
Speaker 2: world countries is how prevalent bribery is kind of in
Speaker 2: the way that governments function, and yet a lot of
Speaker 2: so called First World countries and Second World countries there's
Speaker 2: a lot of bribing and corruption and cheating that goes
Speaker 2: on no matter what. So sure, it would be amazing
Speaker 2: if somehow we could create the in an incentive structure
Speaker 2: where that doesn't happen. But I don't see from a
Speaker 2: psychological standpoint, how the same type of personality that wants
Speaker 2: to become a politician, and who's successful as a politician,
Speaker 2: who kind of wheels and deals as a part of
Speaker 2: what they did to get there, how they would ever
Speaker 2: be totally above everything and rise to the heights of
Speaker 2: government needed to exert real influence. It's a very cynical take,
Speaker 2: but that's how I see it.
Speaker 1: Maria, you mentioned developing countries. This was perceived as being
Speaker 1: a particular problem in Africa, both for historical reasons and
Speaker 1: because a lot of Sub Saharan African countries are very,
Speaker 1: very poor. And so this amazing African entrepreneur called mo Ibrahim,
Speaker 1: who made a huge amount of money in telecommunications in
Speaker 1: the nineteen nineties, became a billionaire. He announced the mo
Speaker 1: Ibrahim Prize. He was going to give. It was millions
Speaker 1: to any African leader who surrendered power after losing a
Speaker 1: democratic election. This is about twenty years ago. I was
Speaker 1: googling around. I think the price has been paid at
Speaker 1: least once. I haven't been able to find any survey
Speaker 1: of whether it's made the difference, But I just think
Speaker 1: it's a it's a clever idea. Whether or not it
Speaker 1: worked in practice, it's a clever idea.
Speaker 4: Didn't didn't Sam Bankman Free want to pay your bribe
Speaker 4: Donald Trump, like a billion dollars not to run for
Speaker 4: reelection or something like that.
Speaker 1: Just as Sam Bankmanfreed wanted to do. It doesn't mean
Speaker 1: it's a bad idea.
Speaker 3: I might. I might color my priors a little bit.
Speaker 2: I'd say fair fair Sometimes you know a broken clock
Speaker 2: is right twice a day. Let's take another question now
Speaker 2: from Jordan, and this one was directed to you, Tim.
Speaker 2: So First, Jordan loves your podcast and has listened to
Speaker 2: every episode you've put out. Good to hear, so keep
Speaker 2: up the great work and thank you. Jordan is a
Speaker 2: dedicated phantom. It's a lot of episode like it.
Speaker 1: I like it.
Speaker 2: I love your podcast too, but I've missed something I
Speaker 2: have to admit.
Speaker 1: They're all available on cat shop. So what is Jordan's question.
Speaker 2: Yes, it's about penalty kicks, so if you don't move,
Speaker 2: you're more likely to save them. I wonder about that,
Speaker 2: since if a goalie never moves, then wouldn't the kicker
Speaker 2: behave differently and make it easier to save shots that
Speaker 2: don't go down the middle. I was just thinking about
Speaker 2: it and was wondering how that was controlled for.
Speaker 1: Actually, you two are the perfect people to answer this
Speaker 1: question because it's about game theory, optimality and trying to
Speaker 1: exploit suboptimal behavior in a soccer penalty. Basically, you've just
Speaker 1: got a striker trying to score a goal. You've got
Speaker 1: the goalkeeper standing there, and they can kind of guess.
Speaker 1: They can dive to the left, or they can dive
Speaker 1: to the right, and there's really a fifty to fifty
Speaker 1: they'll guess right, or they could just kind of not
Speaker 1: dive at all and stand in the middle, which makes
Speaker 1: them look passive and like they're not even trying. However,
Speaker 1: it turns out that because goalkeepers don't stand in the
Speaker 1: middle because it makes them look passive, some strikers have
Speaker 1: figured out, oh if I just boot the balls straight
Speaker 1: at the goalkeeper. They are guaranteed to dive to the
Speaker 1: left or right, and I'm going to kick where they
Speaker 1: were anyway. Jordan's question is, well, hang on, if the
Speaker 1: strikers figured that out, the goalkeeper is also going to
Speaker 1: figure it out. So it's really a question of people
Speaker 1: adapting to each other's strategy and the optimal mix of strategies.
Speaker 1: And you know who better than you two to explain
Speaker 1: the details here.
Speaker 2: I mean, that is such a fascinating element of game
Speaker 2: theory that Nate and I talk about quite often, which
Speaker 2: is kind of this recursive element of it. Right If
Speaker 2: I know that you know that, I know that you know,
Speaker 2: and in poker this happens all the time where you're
Speaker 2: trying to figure out, you know, how do I adjust
Speaker 2: to my opponent. If we're both playing GTO game theory
Speaker 2: optimal poker, then technically, you know, we're we're both executing
Speaker 2: a strategy perfectly. But humans aren't computers, and that doesn't happen, right,
Speaker 2: So if I figure out, for instance, that Nate is
Speaker 2: calling too often, then I should start, you know, changing
Speaker 2: my strategy away from GTO. So even if in this
Speaker 2: particular spot game theory says that I should check because
Speaker 2: my hand is a little too weak to bet for value.
Speaker 2: I bet again because I know that Nate is gonna
Speaker 2: call me again with a worse hand because he overcalls right,
Speaker 2: so I'm kind of adapting to his behavior. Now. Nate
Speaker 2: is a smart guy who also knows a lot about
Speaker 2: game theory. So what if Nate then figures out that
Speaker 2: I'm doing this right because we get to show down
Speaker 2: and he's like, Maria, how did you bet three times
Speaker 2: with you know, bottom pair? This is crazy? You were right,
Speaker 2: you won. But Nate figures out that, oh, I'm over calling,
Speaker 2: So now she's actually playing differently. So now I'm going
Speaker 2: to change my strategy to adjust to that. So next
Speaker 2: time I actually try to do that, Nate ends up
Speaker 2: having just the nuts right, the best hand ever. And
Speaker 2: when I have a good hand, you know, he folds right.
Speaker 2: So he's now adjusted, and I say, oh wait, wait, wait, okay,
Speaker 2: he's changed, so now I need to change. And with
Speaker 2: two good players, this process can can go on indefinitely,
Speaker 2: and sometimes you psyche yourself out right and you start
Speaker 2: getting into mind games, and sometimes you end up overthinking
Speaker 2: and just making the wrong decision. Also, you're making assumptions
Speaker 2: about the other person right, and how the other person
Speaker 2: is seeing you and how they're adjusting. Now, I'm talking
Speaker 2: about poker because I know poker and I don't know soccer.
Speaker 2: But this is exactly kind of the problem that you
Speaker 2: have in this soccer question.
Speaker 1: In theoretical terms, as an academic would analyze it, you
Speaker 1: get to an equilibrium, and the equilibrium is a mixed
Speaker 1: strategy where it's unpredictable. So for example, the striker might
Speaker 1: go left forty five percent of the time, go right
Speaker 1: forty five percent of the time, stick it down the
Speaker 1: middle ten percent of the time, and the goalkeeper might
Speaker 1: stay in the middle twenty percent of the time and
Speaker 1: go left forty percent and go right forty percent. But
Speaker 1: the point is they can't be predictable. If they were predictable,
Speaker 1: that could be exploitable, and they can't just be unpredictable
Speaker 1: in a foolish way. So it's like, oh, I could
Speaker 1: dive to the right fifty percent and to the left
Speaker 1: fifty percent and never stand up in the middle. Well,
Speaker 1: that's unpredictable, but it's also not smart because actually I
Speaker 1: need to keep the striker honest and sometimes stand up. Absolutely,
Speaker 1: there's always an equilibrium, but that equilibrium will involve a
Speaker 1: randomized mixture of strategy.
Speaker 2: Right. But in practice, so this is called randomization. Right.
Speaker 2: The human brain is very bad at randomizing randomly. Most
Speaker 2: humans will end up having a pattern and will end
Speaker 2: up actually doing one thing more than they're supposed to do, right,
Speaker 2: doing another thing less than they're supposed to do, because
Speaker 2: they're not optimal game theoreticians.
Speaker 1: There was actually a recent example where the English keeper
Speaker 1: Jordan Pickford in a high stakes penalty shootout, had a
Speaker 1: water bottle with a list of every player on the
Speaker 1: opposing team and whether he should dive to the left
Speaker 1: or to the right or stand up for that player.
Speaker 1: So they had previously analyzed the play. His coaches have
Speaker 1: basically pre randomized.
Speaker 3: It's a little risky.
Speaker 1: So as long as nobody finds your water bottle ahead
Speaker 1: of time, you can pre randomize. And I think he
Speaker 1: saved some goals and England one that particular, I don't
Speaker 1: shoots out, which is very on English.
Speaker 3: That's great.
Speaker 4: If you don't think that athletes are thinking about this,
Speaker 4: professional athletes, then you're wrong.
Speaker 1: Right.
Speaker 4: They may have their coaching staffs encouraging them to do it.
Speaker 4: They may talk about themselves, they may even do some
Speaker 4: of the stuff like fairly intuitively. Right, in an NBA game,
Speaker 4: you have five players and twenty four seconds on the
Speaker 4: shot clock, So it's kind of a game of like
Speaker 4: trying to maximize your expected value with the best shot
Speaker 4: you can, but the defense is trying to minimize your
Speaker 4: expected value. And like, the decisions these players make are
Speaker 4: usually pretty smart about, like it's not quite worth taking
Speaker 4: this shot, but now times running out and now I
Speaker 4: need to you know, I think a lot of them
Speaker 4: actually quite high IQ. Frankly, there's a lot of money
Speaker 4: and competitive pride on the line in making the right decisions.
Speaker 2: Yeah, so, Nate, Actually, Caleb has been thinking about underhanded
Speaker 2: free throws in the NBA. Here's what he says. From
Speaker 2: what I understand, some of not most players could hit
Speaker 2: a higher free throw percentage if they practiced an underhand technique. Honestly,
Speaker 2: I respect basketball pros less after learning that they don't
Speaker 2: use underhanded free throws because they think it looks goofy.
Speaker 2: It's not a winning mentality. So Nate, should NBA players
Speaker 2: switch to underhanded free throws?
Speaker 3: Yeah?
Speaker 4: Look, there probably are some equilibriums where strategies that are
Speaker 4: considered emasculating right or embarrassing, somehow it might be pursued
Speaker 4: a bit less right, although maybe that changes too.
Speaker 2: Right.
Speaker 3: You've now seen a thing in the NBA.
Speaker 4: Where there's a lot more flopping than there once was,
Speaker 4: meaning that when guys get foul, they'll exaggerate the magnitude
Speaker 4: of what actually happened to them. Right, it used to
Speaker 4: be something people associated with soccer. It's migrated into the
Speaker 4: NBA as well. But yeah, sometimes to take strategies that
Speaker 4: would be seen as embarrassing, there's expected value there if
Speaker 4: you don't care about the embarrassment.
Speaker 1: I'm curious, guys, is that an example in Poka of
Speaker 1: a strategy that is positive expected value but everyone thinks
Speaker 1: it's just embarrassing It only an idiot would do it.
Speaker 2: Yeah, there's one that has turned out to be much
Speaker 2: better than people thought, and it's called dunk betting, which
Speaker 2: is leading into the preflop raiser. And so the reason
Speaker 2: it's called donk betting is because people thought you were
Speaker 2: a dunk donkey if you did it right. Because the
Speaker 2: established wisdom is you always check to the pre flop raiser,
Speaker 2: and once we got more advanced game theory, it turns
Speaker 2: out that no, actually there are some spots where you should.
Speaker 1: Lead what is leading into a pre flop raiser.
Speaker 2: Betting first, right, instead of checking your options so that
Speaker 2: letting the other person act, you act first, you bet first.
Speaker 2: To this day, though, even though it's now accepted, if
Speaker 2: someone does it right away, it still feels donkey ish
Speaker 2: even when it's not right. It's very hard to kind
Speaker 2: of wrap your mind around the fact that this might
Speaker 2: actually be the correct play.
Speaker 4: One other play that can be hard to make is
Speaker 4: folding when you've already put a lot of money in
Speaker 4: the pot and there's just a little bit more to
Speaker 4: put in and see the showdown. But still sometimes you
Speaker 4: maybe do have a fold potentially. You know, I played
Speaker 4: one unusual hand at a tournament a couple of months
Speaker 4: ago where I raise, a second player called in, a
Speaker 4: third player reraise, and if I was gonna call, I
Speaker 4: was committing about half my stack, right, which means ordinarily
Speaker 4: what you're supposed to either fold or go ahead and
Speaker 4: go all in. However, I had a hand that I
Speaker 4: wanted to encourage the third player to enter the pot,
Speaker 4: so I just called, and I'm like, well, I'll have
Speaker 4: a lot of good flops and if I don't have
Speaker 4: a good flop then I can get away if.
Speaker 3: It's a bad flop.
Speaker 4: And anyway, so yeah, Like so I miss the flop,
Speaker 4: which is the first three cards in poker. He bets
Speaker 4: and I fold, getting three and a half two one os.
Speaker 3: It's like, what are you doing, man?
Speaker 4: You're not allowed to fold there, right, which indicated I
Speaker 4: think that he had a good hand and was hoping
Speaker 4: that I continued right, But like, you know, I ran
Speaker 4: the math later and I'm like, actually, this is the
Speaker 4: right play by a couple of percentage points.
Speaker 3: It was just an embarrassing play to make in the moment.
Speaker 1: So I have learned no donk betting for me. And
Speaker 1: I've also learned from Nate that sometimes you have to
Speaker 1: quit whether or not you are ahead. We have to quit.
Speaker 1: We're out of time, Nate, Maria, this has been such fun.
Speaker 1: Thank you so much, Tim.
Speaker 2: Thank you for having us.
Speaker 1: Tim, I always love listening to Risky Business, and thank
Speaker 1: you so much for joining us on cautionary questions.
Speaker 3: Thank you, Tim. We'll do it again some time.
Speaker 1: Thank you. I will be back next week with another
Speaker 1: Cautionary Tale. Cautionary Tales is written by me Tim Harford
Speaker 1: with Andrew Wright, Alice Fines and Ryan Dilly. It's produced
Speaker 1: by Georgia Mills and Marilyn Rust. The sound design and
Speaker 1: original music are the work of Pascal Wise. Additional sound
Speaker 1: design is by Carlos San Juan at Brain Audio. Bend
Speaker 1: and daph Haffrey edited the scripts. The show features the
Speaker 1: voice talents of Melanie Guttridge, Stella Harford, Oliver Hembrough, Sarah job,
Speaker 1: Sam Monroe, Jamal Westman, and Rufus Wright. The show also
Speaker 1: wouldn't have been posped without the work of Jacob Weisberg,
Speaker 1: Gretta Cohene, Sarah Nix, Eric Sandler, Carrie Brody, Christina Sullivan,
Speaker 1: Kira Posey, and Owen Miller. Cautionary Tales is a production
Speaker 1: of Pushkin Industries. It's recorded at Wardoor Studios in London
Speaker 1: by Tom Berry. If you like the show, please remember
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