Steven Levitt, one of the authors of Freakonomics, is a recreational poker player who occasionally plays in tournaments. Last weekend, he found himself sitting at a table with a middling pile of chips, with the required departure time for McCarran Airport drawing ever closer... and so he adopted a strategy of going "all in" on every single hand from there on out, so as to either win or lose quickly enough to make his plane.
Read on for a fascinating tale of how this worked out.
I was in Las Vegas yesterday celebrating my 10 year anniversary with my wife Jeannette, who loves me but not nearly as much as she loves poker. So even though this blog is about my anniversary and about commitment, it is not about the sort of commitment you might suspect.
Rather it is about what economists call a “commitment device,” which is when someone locks himself/herself into a course he/she wouldn’t otherwise want to have to follow, but as a result the person benefits.The idea of a commitment device is counter-intuitive. How can it make you better off to lock yourself in so that you have fewer options to choose from? Aren’t more choices always better than fewer? If there is no strategic interaction, more is always better, but when you are competing against someone else, limiting your options can be helpful. A classic example is an attacking army burning the bridges behind them so that they have no easy way to retreat. It commits the army to fight harder and might lead the opponent to retreat, avoiding a battle altogether...
As for Levitt's meditations on his anniversary, yesterday was my eighth wedding anniversary, actually...
Our commitment device is working just fine, thanks.
Love you, Carrie.