I want to convince you of something. It runs contrary to good old fashioned common sense, and yet I believe it’s true. Consider:
When you encounter an economic opportunity where it’s totally unclear if you have the best of it, frequently the best thing to do is risk some of your money and time and find out.
This could be though of as the anti-business-school method. Business grads spend plenty of hours figuring out how to analyze a business or opportunity, investigate the competition etc. That’s great. But it’s worth a little time to think about what happens if you give up on the B-school method entirely and instead learn about business by doing business.
Ideas like this are of course best illustrated by old gambling stories… Continue reading
I’ve got a guest post up over a Budgeting the Fun Stuff on tips for your Las Vegas trip. Enjoy!
Off-Road Finance also appeared in the following carnivals this week:
One of my favorite hobbies is playing board and card games. There’s something I find very entertaining about studying an arbitrary set of game rules and understanding how to play the game well. It’s an intellectual exercise not dissimilar from trading. You might think, then, that there would be a lot of good economics or trading based board games out there. But in my experience there aren’t. Now, I should be specific about what I think constitutes a good game:
- Fairness and functionality. If the game isn’t fair to all players or doesn’t function right or you can’t figure out the rules then that’s no good.
- Emergent behavior. I think good games behave in ways that aren’t obvious from just reading the rules. A good example would be knock gin – the rules say that you can end the game with un-melded cards by “knocking” for fewer points. What’s not clear from the rules is that this allows defensive cards to be held to prevent your opponent from making melds. Sophisticated play emerges from a simple rule. That’s good.
- Strategic depth. Good games have layers of strategic depth akin to the layers of an onion. Learn one level of strategy, start playing against better opponents, and the next level presents itself. In the very best games, this extends all the way to the highest levels of play and beyond – the best 5 players at any given form of poker are far better than the next 5, for example.
I’m happy to report that by accident I stumbled into an economics/trading game that is in fact a good game: Container. Continue reading
Here’s an interesting little brain teaser that has applications to trading, economics, politics and business.
There is a decision to be made. For simplicity, assume there are two choices and one choice is correct and one is wrong. Assume the labeling of the choices is arbitrary and thus neither is a priori more likely to be correct. Assume the benefit of a correct decision is the same in magnitude and opposite in sign from the cost of an incorrect decision.