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