March 27, 2003
My wife's workplace runs an NCAA tournament pool. She wanted to participate but since she doesn't follow college basketball, she asked me to fill out a bracket. I did. I asked how much money we were going to win. She told me what the pot was but noted that the top scorer only received half the pot. Half was awarded to the worst entry.
Two generalizations about my wife's coworkers are relevant to what I did then. First, they are very nice people. They probably decided to award half the money to the worst entry because they were trying to compensate the loser for his shame and embarrassment Second, my wife's coworkers are not economists. They don't think like economists. Many of them, I'd bet, even dislike the way economists think.
So I, a practicing economist, filled out a second bracket, a bracket deliberately intended to lose. It was easy and fun. No sixteenth seed has ever won a game, so I picked the sixteenth seeds for the Final Four. (Vermont clobbers Arizona! IUPUI rolls!)
The result was that even though only two rounds have been played, that entry is locked into last. We have seven points, but the next lowest score is twenty-nine. And we can't score any more!
One of my wife's co-workers sought to console her for her extremely poor performance. She said it was done deliberately. Her co-worker said, "WHAT?" My wife explained that half the pot was a nice amount and that economists predict that people respond to incentives.
Her co-worker was shocked. My wife stands accused of "impropriety." She has been banned from the pool for one year and the pool will have different rules next year.
The moral of the story is that thinking like an economist may make you unpopular but can make you some money.