Today on The Setting Trick, we're thrilled to welcome Richard Zeckhauser, a towering figure whose expertise spans both economics and competitive bridge. A professor at Harvard Kennedy School, Richard has spent decades exploring the complexities of decision-making, risk, and strategic behavior. His groundbreaking work has shaped the fields of economics and public policy, offering insights into how we assess uncertainty in everything from health to finance. But his talents extend beyond the classroom—he's also a highly accomplished bridge player, with two North American Bridge Championships to his name, including the prestigious Kaplan Blue Ribbon Pairs. Join us as we dive into Richard's unique perspectives on strategy, risk, and the fascinating intersections between his professional work and his passion for bridge.
[00:00:01] John McAllister, and today I am very excited to share a conversation with Richard Zeckhauser, who is a two-time NABC champion, albeit spread with a 40-year gap.
[00:00:21] He is the Frank P. Ramsey Professor of Political Economy at the Kennedy School of Harvard University.
[00:00:31] I am going to blow, I am blowing this introduction, Richard. I mean, you have an amazing resume.
[00:00:38] And Charlie Munger, Warren Buffett's longtime esteemed business partner said,
[00:00:44] The right way to think is the way Zeckhauser plays bridge. It's just that simple.
[00:00:51] So you've made your mark in the academic world. You've made your mark as an investor.
[00:00:56] I was in a decision-making class recently online with a woman named Annie Duke, who's a professional poker player.
[00:01:04] And she was talking in office hours about next steps.
[00:01:10] And she mentioned your name as somebody that people could study under for how to make better decisions.
[00:01:17] And so this conversation is coming from, based on that, because I know you, I played against you.
[00:01:24] We haven't really, this is the most we've ever talked, but I'm delighted to have you as my guest on this podcast.
[00:01:32] Thanks so much, Sean. Pleasure to be here.
[00:01:35] I hope you won't ask too. I hope you won't ask as hard questions as you are when you're a defender.
[00:01:42] Well, one of the things that I like to do is reach out to guest bridge partners.
[00:01:50] And I reached out, I saw that you played with Michael Rosenberg, Boya Brogland and Gaya Helgemo recently in some of the NABC pair games.
[00:02:03] And Michael Rosenberg got back to me and what he said was, if I could describe Richard in one word, it would be erudite.
[00:02:16] Jeez, I thought that Michael was pretty perceptive, but I guess not.
[00:02:24] I mean, I can tell you my usual interaction with Michael is that we'll discuss some bridge thing and he'll go off into, you know, highly complex things.
[00:02:38] And then I'll ask him about some, you know, real world puzzle, mathematical problem, something that happened in current events and see how he thinks about it.
[00:02:48] And it's always an interesting sort of exchange of things.
[00:02:53] The other thing I've discovered about Michael is there's no one who loves bridge more, which is really, I think, an important feature to have if you want to be a bridge player.
[00:03:03] And the other notion is he is the most experienced bridge player that I've ever encountered.
[00:03:13] So, you know, I sort of say, Michael, I just saw the most beautiful play.
[00:03:16] Maybe when we're going over the hands after something or other, he said, he said, oh, you know, I encountered that in the 1983 Camrose Cup, whatever else it is.
[00:03:28] So he's seen all the plays, which makes it a lot easier to play.
[00:03:33] How many times do you think you've played with Michael?
[00:03:39] I've played with Michael more than with any other, you know, leading player, probably 18 or 20.
[00:03:46] And you guys, you guys were in the, in the, in the blue ribbon pairs.
[00:03:51] I think it was, you guys were in like second place going into the final session.
[00:03:56] Yeah.
[00:03:56] I have a lot of second places going into the finals.
[00:04:00] The question is that doesn't, as I understand it, it's what's the score that's at the end that matters.
[00:04:07] I had an interesting experience with Garrett Helcomo, which was after three sessions in a row, um, in the blue ribbon pairs, including the final session, we were in ninth place.
[00:04:18] Most, you know, last fall we were in ninth place.
[00:04:21] It was a very unusual situation.
[00:04:23] Garrett got knocked out of the, the Soloway event.
[00:04:27] Yeah.
[00:04:27] In the first round or something like that.
[00:04:30] So I said, Hey, would you like to play in the blue ribbon pairs?
[00:04:32] He said, sure.
[00:04:32] So we played the blue ribbon pairs.
[00:04:34] And then we couldn't move up and we couldn't move down.
[00:04:37] So we just ended up ninth.
[00:04:39] It was pretty good.
[00:04:40] I mean, there were, you know, almost 300 pairs.
[00:04:42] How do you play bridge?
[00:04:43] Like, uh, you're, you're still, you know, a professor at the Kennedy school.
[00:04:49] Is that full-time?
[00:04:50] I'm a full-time professor.
[00:04:52] Yes.
[00:04:53] And, uh, the answer is not very much.
[00:04:56] For example, I can only play in the pair of games at the nationals because I have to work, um, which is too bad.
[00:05:03] And I can virtually never play in the fall nationals.
[00:05:06] Last year I was on sabbatical.
[00:05:07] So I was able to play with, you know, with care, which was, you know, fun.
[00:05:12] And, you know, he's just, you know, incredibly creative in what he does.
[00:05:16] So, uh, you're frequently not quite sure what's going on, but, you know, it's, uh, great fun and you feel pretty good.
[00:05:26] I, I was going to say one of the most or the most important thing to me about bridge is, uh, the partnership aspect.
[00:05:33] Yeah.
[00:05:33] And one of the things that you really have to do is you have to be willing, uh, to maximize your expectation rather than minimize your regret.
[00:05:46] Let me tell you what I mean by that.
[00:05:48] Maximizing your expectation means you're going to, you know, maximize your score.
[00:05:53] If it's an imps, you're going to maximize your expected imp score.
[00:05:56] But sometimes people don't like to do something which could work out very poorly and you're regretted a lot.
[00:06:02] And your partner is going to say you did something stupid, or you're going to say to yourself that I did something stupid.
[00:06:08] And you have to get over that and think about, you know, even though I have a 20% chance of losing 10 imps.
[00:06:18] If I have a, um, you know, 50% chance of gaining five imps, you know, that's going to be worthwhile in a long match.
[00:06:27] And people don't like to do that.
[00:06:30] Uh, we're, we're going to talk, I think a little bit about behavioral decision making and the, uh, pioneers in that field were two people named Tversky and Kahneman.
[00:06:40] Many of your listeners have read Kahneman's thinking fast and slow.
[00:06:44] And their major contribution, uh, was it something called prospect theory where they found that people value small losses much more than they value small gains.
[00:06:56] So, um, people, if you ask the typical person, will you take a game, you know, an intelligent person, you know, American bridge player.
[00:07:05] Will you take a 50% chance of winning $10 and as opposed to against a 50% chance of losing $8.
[00:07:13] They say, no, no, I don't want to do that.
[00:07:15] Well, if that's your attitude, you're not going to do very well at bridge.
[00:07:19] And sometimes that requires you're doing something, you know, uh, that will look foolish after the fact.
[00:07:26] Can you think of an example of you or Garrett doing something like, uh, well, I'll give you an example from my time.
[00:07:34] I played with Boya Broglin, which was last year.
[00:07:38] We were in the third session of the platinum pairs, which is the final session.
[00:07:44] And the bidding went, um, a hard on, uh, boy, I passed it.
[00:07:51] It went a hard on, we're non-vulnerable versus vulnerable.
[00:07:53] It goes pass a heart and Boya over calls a no Trump.
[00:07:57] And the next person bids, uh, two hearts.
[00:08:00] Yeah.
[00:08:01] And I have a reasonable hand and I say double, which is just values with us.
[00:08:08] And it goes pass and Boya bids three diamonds.
[00:08:10] Okay.
[00:08:11] Now this was the first time that we had played together.
[00:08:15] Um, and, um, in our, uh, system discussion, the word psych never came up.
[00:08:23] Okay.
[00:08:24] And so it went pass and I had to decide whether I had a sufficient number of points that despite
[00:08:32] the fact that he had never psyched in, you know, two and a half sessions, and we had never
[00:08:37] discussed sites that he might've psyched.
[00:08:40] And I eventually, uh, decided to pass recognizing that he could might very well say after the
[00:08:47] session, you should know, I would never, you know, psych with a new partner without discussing
[00:08:52] it.
[00:08:53] And it worked out well.
[00:08:54] I mean, he did three diamonds.
[00:08:55] We got a good score.
[00:08:56] He had, you know, seven diamonds to the eighth jack.
[00:08:58] Um, and I think that there are lots of situations that are like that.
[00:09:03] Um, and I've, uh, studied behavioral decision enough that I don't feel uncomfortable when
[00:09:10] I do this.
[00:09:12] I'll tell you something, um, that, uh, a difference between playing with Michael Rosenberg and Gair
[00:09:19] Helgemo who are clearly two of the world's great players.
[00:09:22] Um, Michael, um, says that no one is a good bridge player.
[00:09:29] Okay.
[00:09:30] And what he really needs is, is that if you look over, you know, uh, 26 boards, almost
[00:09:39] every bridge player, no matter how good will have made some things that in retrospect look
[00:09:45] like mistakes.
[00:09:46] Yeah.
[00:09:46] And that's because bridge is a game of mistakes, which makes it, by the way, in my view, a worse
[00:09:51] game.
[00:09:51] It's like, uh, I think, uh, the other, another thing that I do is I play tennis.
[00:09:57] Yeah.
[00:09:57] Tennis is a game of mistakes.
[00:09:59] Even, uh, for the world's best players, they make more, they have many more mistakes than
[00:10:06] they have winners usually.
[00:10:07] So that makes you a little bit unhappy if you believe in loss aversion that, you know,
[00:10:12] downside things are worse than upside, uh, things.
[00:10:16] Uh, so after the session you're with Michael, you'll go over the hands, but we really
[00:10:21] rarely discuss the hands where, you know, we got our two preference signals, right.
[00:10:26] Even though they were subtle, you know, we bit to the right slam, so on and so forth.
[00:10:29] We go over the things that we did poorly.
[00:10:32] Yeah.
[00:10:32] Helgemo and I've played with him probably four times.
[00:10:36] Yeah.
[00:10:37] Um, and after the session he'll sort of say, um, okay, if you want to, we can discuss the
[00:10:44] boards.
[00:10:44] I mean, he doesn't care.
[00:10:47] I mean, his view is, you know, I'm a great bridge player.
[00:10:51] You're a, uh, a very, very good bridge player.
[00:10:55] Uh, nothing really is going to be gained by this.
[00:10:57] Anything that we discussed won't come up anyhow.
[00:11:01] And, um, I, I would like to recommend actually, um, the approach of Boye-Broeigland, which I think
[00:11:09] is the best approach to bridge.
[00:11:12] Um, and I got this from reading the book about him called On the Edge or Bridge on the Edge,
[00:11:18] which is you should play bridge to have fun.
[00:11:22] I mean, there's so many frustrating aspects about it that if you play to have fun, uh,
[00:11:29] that doesn't mean you're not playing seriously, but after you get through the game, you sort
[00:11:34] of say, you know, thanks, John.
[00:11:36] I really enjoyed that.
[00:11:37] That was, you know, so terrific.
[00:11:39] And we had some good defenses and I'd like your witty remark to Joe in the third round.
[00:11:45] And, um, thanks for getting me the donut.
[00:11:48] And that's the way, I think that's the way you should, uh, think about bridge.
[00:11:53] Hmm.
[00:11:55] So, so you asked me when I play or how I play.
[00:11:57] Yeah.
[00:11:57] The answer is, um, I started playing as a, as a kid when I was, uh, 11 years old.
[00:12:03] I played a lot in high school.
[00:12:05] We had 12 players in my high school out of, it was a class with 540 kids in each class
[00:12:12] who were good players.
[00:12:14] Uh, you know, almost all of them, you know, played in ACVL tournaments.
[00:12:18] And then, um, in college, um, I started playing with Charlie Coon, who was a great natural bridge player.
[00:12:29] Almost the opposite of, you know, some of the people that I play with now who like to have elaborate systems.
[00:12:35] And we did something which relates to this, uh, you know, uh, absorb your losses, you know, easily.
[00:12:44] Uh, we had a lot of preemptive jumps and in the 1960s, mid 1950s, not very many people played that way.
[00:12:52] So that gave us a, you know, I think a significant advantage for, aside from the fact that Charlie was a great natural bridge player.
[00:13:01] So we won, you know, we won the blue ribbon pairs.
[00:13:04] We won quite a few regional events.
[00:13:06] We came in second in some national events.
[00:13:10] Then I had a family and I sort of hardly played for 20 years, you know, played, you know, maybe one national and one regional event a year.
[00:13:20] And then when my kids were grown up, I started, you know, playing again, you know, the first serious experience I had was playing on Malcolm Brockman's team where I was neither paid nor paying.
[00:13:35] I was the only person on the team was neither paid nor paying.
[00:13:37] And that was great because I got to play with Paul Soloway and I got to play with Eddie Wald.
[00:13:42] And, um, you know, I had to change the style of bridge that I played because they played two over one and they played, uh, you know, much more elaborate systems.
[00:13:54] Um, and what I played wasn't as elaborate as they played with their best players.
[00:13:59] Uh, that's right.
[00:14:00] But, you know, that was a terrific experience.
[00:14:02] And then, you know, many years later, I, you know, I played with people like Michael and, you know, Ger and Boya, um, a little bit.
[00:14:11] And now I get to play in two nationals a year.
[00:14:15] I play in one regional near here a year.
[00:14:18] And I play online most frequently with a terrific player named Marian Mickelson, who's a Dutch woman who lives in Sweden.
[00:14:28] Um, and she always, you know, gets us a good pair to play against.
[00:14:34] So you'll just play, you'll just play like a match of like 20 boards.
[00:14:37] We'll play a match of 20 boards and see, we always, you know, play something that was played in the European championships or the, you know, world championships.
[00:14:46] So you can see how you do.
[00:14:49] And, uh, we've been, uh, you know, I think more than held our own against, you know, many of the world's, you know, top players.
[00:14:57] So that's fun.
[00:14:58] And, um, I think I may have a slightly selective memory and not remember the times that we lost to Andrii, but I think that's what you're supposed to do.
[00:15:07] And that's recollection bias, right?
[00:15:09] Well, that's not quite recollection bias.
[00:15:13] Recollection bias is that you, when something happens, you think that you knew something very unusual happens.
[00:15:21] You think you knew that it was likely to happen.
[00:15:23] Uh, uh, um, and, or, you know, you, uh, misjudge what, what you thought.
[00:15:30] And, uh, also to some extent recollection biases, you don't really update your probabilities very well.
[00:15:37] If you thought you knew that it was going to happen, when it happens, then you don't change, uh, your assessments, uh, sufficiently.
[00:15:47] And there are, I mean, reading, uh, Kahneman's thinking fast and slow, you'll discover many things like this that you do.
[00:15:56] I mean, of course he discussed the ones that he or he and Amos Tursky came up with, but you know, that's a good place to start.
[00:16:03] So, so you played with Gare, uh, last fall in the Blue Ribbon Pairs.
[00:16:08] What, like, it was because he got knocked out of the Soloway.
[00:16:11] Like, what was your plan?
[00:16:12] That didn't happen.
[00:16:13] What was your plan?
[00:16:14] Who were you going to play with?
[00:16:14] I was going to find somebody who was knocked out of the Soloway.
[00:16:19] I figured I would be able to find a good partner and, uh, possibly, uh, someone that I knew.
[00:16:26] One of the embarrassing things for me in going to the, uh, Nationals is, you know, John McAllister will know, uh, there are, you know, 400 people there and I'll know 80 of them.
[00:16:38] Um, you know, I'll know 80 people.
[00:16:40] So, um, but you know, uh, Marion was actually the one who sort of said, oh, Gare got knocked out.
[00:16:47] Um, I asked him if he wanted to play with you.
[00:16:49] He said, yes.
[00:16:50] Well, you know, I said, oh, that's great.
[00:16:52] Yes.
[00:16:52] I'll play with Gare.
[00:16:53] We had a, um, you know, a 12 minute discussion as to what we were going to play.
[00:17:02] As far as I understand, we, as far as I can remember, we didn't have any significant misunderstanding.
[00:17:09] Um, because he plays, you know, you know, very naturally.
[00:17:14] So that, that makes it, you know, easy to play with him.
[00:17:17] Um, but you know, we're giving up a lot by not having, you know, some of the understandings that I'm sure you have with your partners.
[00:17:25] So what do you and Michael play then?
[00:17:27] Like, uh, Michael and I have a system that, yeah, we play two over one.
[00:17:31] Um, he claims that a lot of the treatments are mine, uh, but I know that they're overwhelmingly his.
[00:17:39] Um, and I just, you know, we've agreed to disagree about that, um, you know, particular, uh, element of the, of the game.
[00:17:49] Um, and the one thing that, um, Michael has significantly changed my game that I can recommend to anybody, everybody is he sort of said, we just play a lot of suit preference signals.
[00:18:04] And my guess is of his criticisms of me after the game, uh, 40% of them were, you didn't recognize that when I played the three, two of clubs that I was really calling for hearts on that hand.
[00:18:21] Because, you know, as subtle as, you know, normal suit preference signals are, you know, he can be more subtle still.
[00:18:31] But, um, I will also say, say that, um, in our many times of playing together, Michael has never, you know, had a harsh word and I've never had a harsh word.
[00:18:42] Um, and one of the things that amazes me about, uh, bridge experts is that many of them can't control their, uh, you know, criticisms of their partner.
[00:18:59] I mean, it's one thing to sort of say, you should have recognized that my, you know, two, three, two of clubs meant such and such is very different, which is, I've told you this a thousand times, you know, type of notion.
[00:19:12] Uh, I mentioned Malcolm Brockman and Paul Soloway.
[00:19:15] So I saw, uh, Paul play with Malcolm on many occasions.
[00:19:20] You know, Paul was a great player.
[00:19:23] Malcolm was not a great player.
[00:19:26] And Paul, though Malcolm was a saint to him, I mean, he helped him through medical problems, financial problems, life problems, would sit at the table and say, Malcolm, you're an idiot.
[00:19:38] I've told you, you know, things like that.
[00:19:39] And, um, I don't think maybe Malcolm was a masochist, but it struck me as being somewhat bizarre.
[00:19:47] And when we were playing in the platinum pairs this spring, an individual, I won't mention who it is, but one of clearly one of America's top, you know, five bridge players was playing with another super player, not quite a thing.
[00:20:03] And playing against us, he yelled at his partner.
[00:20:08] And I thought it was just bizarre.
[00:20:11] It was a new partnership or relatively new partnership.
[00:20:13] But, um, I can't believe that almost anybody doesn't play worse when somebody's just yelled at them in the middle of the thing like that.
[00:20:25] Yeah.
[00:20:26] I mean, that's kind of like, uh, good for me to hear because, uh, sometimes I, I succumb to that.
[00:20:34] Well, I suggest wait till the bathroom break, go into the bathroom, go into a stall and yell at the toilet.
[00:20:42] And you can say you stupid thing.
[00:20:44] In, in preparation, I always like to brag about how, how, how well I prepare for these interviews.
[00:20:49] And, uh, and so you suggested, uh, one article that you had written, um, called investing in the unknown and unknowable.
[00:20:59] And I used to work for a hedge fund and, uh, we were a quant fund and my boss used to, uh, sort of, uh, he didn't think much of the efficient market hypothesis.
[00:21:14] In paragraph 15, one, one of this article, I would say that in one sentence, you essentially, uh, shot down the whole efficient market hypothesis.
[00:21:26] Uh, the sentence was when the probabilities of future states of assets are known as the efficient market hypothesis posits, wise investing involves solving a sophisticated optimization problem.
[00:21:39] So Boya, I also reached out to Boya and he told me about the psych that you fielded.
[00:21:47] Uh, but he also said that he was, uh, happy to play with you in the platinum pairs in Memphis.
[00:21:53] And that I should say that to you.
[00:21:55] Oh, that's good news.
[00:21:57] I mean, it was, um, there's another, uh, notion in behavioral decision, um, which is that people pay a lot more to go from, um, a 3% probability.
[00:22:09] To a zero probability than they would to go from a 10% probability to the 3% probability.
[00:22:15] So that if you ask someone, you know, uh, you have a dread disease and we can cut its incidents from 10 to three.
[00:22:24] Yeah.
[00:22:25] What would you pay for?
[00:22:26] What percentage of your life, future lifetime income would you give up?
[00:22:29] It tends to be less than they would pay to go from three to zero.
[00:22:32] So Boya told me a little while ago that he would like to play, but he wasn't sure he could play.
[00:22:39] Okay.
[00:22:40] But he thought it was likely.
[00:22:41] Yeah.
[00:22:42] So I thought that was 3%.
[00:22:44] Okay.
[00:22:45] But now it's down to 0%.
[00:22:49] Not quite.
[00:22:50] So do you know the reason that I played with Boya?
[00:22:53] Yeah, I do actually.
[00:22:54] Yeah.
[00:22:55] Yeah.
[00:22:56] Yeah.
[00:22:56] I mean, so, um, you can do it yourself, but basically I was supposed to play with Gare.
[00:23:03] Yeah.
[00:23:03] Um, Gare's visa got screwed up.
[00:23:06] Right.
[00:23:07] He wrote to me and he said, there's, um, bad news and good news.
[00:23:11] The bad news is, uh, I can't get into Canada.
[00:23:15] Though I've gotten into the United States many times.
[00:23:18] The good news is that Boya would like to play with you.
[00:23:22] So I said, that will be, you know, that will be fun.
[00:23:25] And that's what we did.
[00:23:27] Um, we had slightly more preparation than I did with Gare.
[00:23:32] Uh, um, and he has a lot of treatments.
[00:23:36] I got this more from reading the book, um, about him, uh, than that are, I think, quite
[00:23:44] useful, um, that we didn't play, but maybe we will going, uh, in, you know, going into
[00:23:51] the future.
[00:23:54] So he had originally, cause he told me this and he was, he thought it was quite humorous
[00:23:59] that I would ask you, or that I would tell you that he was available to play like, uh,
[00:24:05] well, I'll laugh then, but it is useful, but you should understand that the way I learned,
[00:24:11] I mean, this may be, um, my future relationship with Boya.
[00:24:18] I mean, the first time I only learned, uh, the day before that I was going to be playing
[00:24:23] with him.
[00:24:24] Ah.
[00:24:25] And the second time we, I think we both enjoyed our game.
[00:24:29] Yeah.
[00:24:29] Um, and I think we both thought that we could do better.
[00:24:34] Right.
[00:24:34] Um, so, uh, you know, we sort of said, well, you know, we'll try and play again in the future.
[00:24:41] And, uh, then I read his book and I wanted to, that made me want to play with him more,
[00:24:46] not because he made so many great plays, but because I thought his philosophy was, was a
[00:24:52] good one.
[00:24:53] Um, and so now I know, but now I'm at 1%, you know, I didn't really get to 0%.
[00:24:59] Uh, I, by the way, in my, one of my papers, I refer to getting to 0% as 0% worship.
[00:25:06] And people really do worship getting to 0% on their wrists.
[00:25:11] Why do you say 0% in this case with Boya?
[00:25:13] Like, I don't understand how you're.
[00:25:15] No, what I'm saying is you said he was going to play.
[00:25:17] Yeah.
[00:25:18] I think that when the guy has to come from Norway to get to Memphis, there's some chance
[00:25:26] that something will go wrong.
[00:25:28] Right.
[00:25:28] Yeah.
[00:25:29] So it's 1%.
[00:25:30] And, um, you know, um, I'm, uh, older than the average rich player, even though the ACBL
[00:25:37] is aging a year per year.
[00:25:40] Yeah.
[00:25:40] Um, and I tell people, look, uh, you know, there's a, uh, 10% chance that my wife or I will be,
[00:25:50] you know, sick and that I will, I'll, you know, but I'm almost certainly will let you know,
[00:25:55] you know, a month in advance.
[00:25:58] That's why that hasn't happened, but anybody can get COVID type of notion.
[00:26:04] So you stopped playing, like you won the Blue Ribbon Pairs.
[00:26:09] I didn't play the, you know, I, I played until, until about 1972.
[00:26:15] I played mostly with Charlie, but then I would only play, you know, uh, maybe one national
[00:26:22] year, one regional year.
[00:26:23] I would play locally.
[00:26:25] Um, because, you know, my kids were around and, uh, I don't know if you're married, but
[00:26:33] if you're married, you have to more or less get a little bit of permission to play unless
[00:26:37] you're a professional bridge player.
[00:26:39] Right.
[00:26:39] Um, so that was my situation.
[00:26:42] And then, you know, uh, just as I, my kids were getting reasonably old, I started playing
[00:26:49] with Malcolm.
[00:26:51] And how did you, how did you and Malcolm, uh, become friends or become bridge partners?
[00:26:56] Well, I met him at a, uh, bridge tournament, uh, originally.
[00:27:00] I mean, Malcolm was for his, let's do this in a nice way.
[00:27:05] Given his bridge ability, he was the smartest person that I knew, uh, meaning I can take
[00:27:11] a level of bridge skill and see how smart you were.
[00:27:14] Malcolm was first in his class at Yale majoring in physics.
[00:27:17] Oh, wow.
[00:27:19] So, um, he was a really super smart guy.
[00:27:22] You know, he wasn't a terrific bridge player, though he did win a world championship.
[00:27:27] But he was a super successful, like he owned Seagrams, right?
[00:27:31] Wasn't, was that the same?
[00:27:32] No, no.
[00:27:32] You're thinking, no, no, he doesn't.
[00:27:34] He didn't own Seagrams.
[00:27:35] He was an oil man.
[00:27:36] Okay.
[00:27:37] And he owned an insurance company.
[00:27:39] You're thinking of Bronfman, B-R-O-N-F-M-A-N.
[00:27:43] He's Bronfman, B-R-A-C-H-M-A-N.
[00:27:47] Okay.
[00:27:48] And he was a lovely, lovely, um, man.
[00:27:51] We were good friends.
[00:27:51] I think we were good friends in part because, um, you know, he was, you know, an intellectual.
[00:27:59] He liked hanging out with a Harvard professor.
[00:28:02] I liked hanging out with him.
[00:28:04] He was, you know, you know, that's still a lot of, uh, fun.
[00:28:08] So that was, did he live in Boston?
[00:28:11] No, he lived in Dallas.
[00:28:14] Um, and, uh, it was interesting.
[00:28:17] Uh, I mean, he was just with a, he had a tiny oil company, maybe had 20 or 30 people working
[00:28:23] for him, but he was just very, very good at, um, drilling oil wells and having the oil
[00:28:29] wells be successful.
[00:28:30] Uh, my wife and I invested with him three times.
[00:28:34] Um, he had, I don't know, half a dozen wells, which were sufficient to support him for the
[00:28:39] rest of the life of his life.
[00:28:41] Unfortunately, none of them were the oil wells that we participated in.
[00:28:45] And we, you know, we basically put in a hundred dollars and got back 160.
[00:28:50] You know, that type of thing.
[00:28:52] So I wish that he had directed me to the correct wells, but he didn't, you know, nobody knows
[00:28:57] when you drill oil wells, how you're going to do.
[00:29:00] So it's in your bio, it says that you're also, in addition to being a professor at the
[00:29:05] Kennedy school, that you're also involved with a real estate.
[00:29:08] Uh, so yeah, I've, yeah, I've been involved with, um, a variety of companies, you know,
[00:29:18] over the course of my lifetime.
[00:29:19] Most of them have been, uh, companies where one of my students or one of my, you know,
[00:29:27] friends started it.
[00:29:28] And I was, you know, sort of, uh, a pretty critical advisor, um, to that.
[00:29:35] The first one, I was partners with a man named Victor Niederhofer, whom if you've been an
[00:29:40] investor, you may have heard of.
[00:29:42] And Victor, in addition to being a, um, brilliant investor was, uh, the number one amateur squash
[00:29:50] player in the country for many years and the number one professional squash player, uh, in
[00:29:56] the world one year.
[00:29:57] And, you know, he did basically what quant investors did, you know, 20 years later in the 1970s,
[00:30:05] uh, we had 20 radio shack computers, which are probably about as good as, you know, uh,
[00:30:12] three, uh, Apple iPhones, uh, running in our office, uh, looking at patterns among commodities.
[00:30:19] And we would buy commodities on that basis.
[00:30:23] Basically, uh, we were like a trivial version of Renaissance capital.
[00:30:29] And Victor was, I mean, this was, you know, 90% Victor's doing, but Victor was, you know,
[00:30:36] a wizard in all of this, but his problem was that he was very poor at money management and
[00:30:41] he would always invest too much.
[00:30:43] So I eventually sold out of that company.
[00:30:46] And then there were, um, a couple of, uh, small companies that I was a board member of,
[00:30:52] uh, both of which were run by, uh, my friends or by former student, actually by former students.
[00:30:58] One of which developed the video compression algorithm for the internet.
[00:31:03] So the reason that I could see you clearly at least 10 years ago was due to our technology.
[00:31:10] And then another of my students, who's actually a bridge player named Mark Thompson,
[00:31:16] started a company that did real estate investing.
[00:31:19] And, um, it's been going now for 40 years.
[00:31:25] Um, I joined it officially about 20 years ago.
[00:31:28] Um, and the interesting thing is that, uh, you're expected rate of return in the stock market.
[00:31:36] I presume many of your listeners are interested in investing is about 8% a year and you're expected
[00:31:43] return as a real estate investor.
[00:31:45] I mean, what, you know, developers generally earn is, you know, 18 or 20% a year.
[00:31:52] Now, um, they, these, uh, developers have special skills, which I certainly don't have.
[00:32:00] But what our company does is we say to developers, look, we will put some money with you.
[00:32:07] And you will take something off the top.
[00:32:10] So we'll end up earning, you know, uh, well, we actually earn net 18% a year.
[00:32:15] Our developers earn 23% a year, but that's just the normal rate of return.
[00:32:21] If you have those skills.
[00:32:22] And to some extent, that's what I've done.
[00:32:25] I call that, um, you know, sidecar investing.
[00:32:30] Otherwise I've got a big, powerful motorcycle that's pulling us along and I ride in the sidecar and we do provide some value to them.
[00:32:39] We provide financing, but we also talk to them about how to finance things.
[00:32:43] We talk with them as to what we should invest in.
[00:32:46] And that's a little bit the way you should play bridge, you know, um, and if you can get to play with Ger Helgemo, you have a big, powerful motorcycle and you're in the sidecar and you don't have to do much.
[00:32:58] You just, you know, you follow suit and occasionally, you know, uh, make a qubit and get into a slant type of, type of notion.
[00:33:06] I think that, um, these skills of decision theory, bridge and investing all sort of flow together and reinforce each other.
[00:33:17] So many things that I write about, I learned about because I played bridge, you know, how to think about small probabilities, how to gauge probabilities effectively.
[00:33:28] And, uh, I think, you know, if you read, uh, the bridge world or the ACBL Bolton, there'll be lots of articles about how a guy played a hand better than somebody else.
[00:33:38] And he had a 2% edge or a 3% edge.
[00:33:42] Virtually never do they sort of say, what do you think is the likelihood that, you know, with nothing else that your partner has, you know, uh, you know, he's just preempted at the three level non-volved versus non-volved third seat.
[00:33:56] What's the likelihood that he has, uh, you know, seven card suit as opposed to a six card suit, which is quite critical.
[00:34:04] And they should ask the question and then you'd get better at saying, oh, that's really more closer to 30% than 80%, even though your principal is to play with seven cards.
[00:34:17] Because in third seat non-vulnerability, he will open almost any six card suit and six card suits are dramatically more likely than seven card suits.
[00:34:24] So I just want people to start to think in terms of subjective probabilities.
[00:34:30] And I've done lots of studies as to how good people are at, uh, coming up with subjective probabilities, including what's the likelihood that the next car that goes by is green.
[00:34:43] And you start to discover that when what you say is 30% really is only 10%.
[00:34:48] So you learn to calibrate yourself better.
[00:34:51] So some of it is a general skill and some of it is applied to bridge situations.
[00:34:56] I think it carries over from one to the next.
[00:35:00] So if I'm good at guessing your likelihood of having a six card suit, I'm good at, uh, deciding what's the likelihood that you led fifth best from a four card suit against no, from fifth best from, uh, a four card, fifth best from a five card suit against no Trump to fool the declarer.
[00:35:19] And the declarer was, you know, uh, Michael Rosenberg, would you do this again?
[00:35:24] It's an expert player.
[00:35:26] And the answer, by the way, my experience is it's as valuable to do this against an expert player as a non-expert player because they don't think that you would do it against them.
[00:35:36] So how do you evaluate your own bridge, your own bridge game?
[00:35:40] I sort of, well, first of all, I said, I don't try and evaluate it so much.
[00:35:45] Um, because I, you know, I think I'd be, since it's a game of mistakes, I'd be a little bit disappointed, but I just look to see, you know, how are our scores?
[00:35:55] How are we doing?
[00:35:55] I think that when I go to a pair game at the nationals, um, I'm playing fine.
[00:36:02] If I come in the, uh, you know, top 15, I'm playing okay.
[00:36:08] If I come in the top 30, I'm playing poorly.
[00:36:11] If I don't get to the final cut.
[00:36:15] Um, and I realized that there's a lot of luck.
[00:36:18] So, um, you know, you might even play well and not make it to the final round.
[00:36:23] What about the, like, you've got a decision in bridge, like you've got a decision, like you're, you're going to bid or you're going to pass.
[00:36:31] Um, how do you evaluate those situations and in hindsight?
[00:36:36] Well, I think I try to, uh, learn, um, a little bit.
[00:36:42] I mean, I can tell you something that I've just changed with my partners, which is, um, though I don't think, uh, so much with Michael Rosenberg, which is that we're going to routinely open up.
[00:36:54] Five card week, two bids and first and third seat non-vulnerable.
[00:36:59] Well, I've done that three times.
[00:37:02] Okay.
[00:37:02] So I'm going to decide whether, should you really open up the, you know, King 10 five times or should you wait till you have the King Queen 10 five times?
[00:37:14] And I'll, you know, I'll look a little bit from experience and I'll look a little bit, you know, I'm playing with John and John says, look, I've been playing this for years.
[00:37:24] Let me tell you, it's a great system and you should do it with any five card suit.
[00:37:28] Or John says, let me tell you, I've been playing it for years and my partner and I would never do it unless we have, uh, three of the top five honors.
[00:37:37] So you learn a little bit from other people.
[00:37:39] You learn a little bit from reading.
[00:37:40] I've actually gotten more from reading than most bridge players, um, because I haven't been able to play very much.
[00:37:47] So I find reading the bridge world useful.
[00:37:51] I find reading, you know, the book about, uh, Boya Brogland useful.
[00:37:56] So, you know, I basically think that's what I do.
[00:37:59] And I ask, I think that you have a right to ask people that you play with a few questions.
[00:38:05] So I will write to Michael Rosenberg, you know, once every month and a half about some bridge situation.
[00:38:13] But I also make sure that it's at least a moderately interesting situation for him or what I think will be a moderately interesting situation for him.
[00:38:23] And I would do the same thing with Boya.
[00:38:26] And I don't, I have no idea.
[00:38:27] I've never written to Gary about it.
[00:38:29] I don't know whether he would answer or not.
[00:38:30] Maybe he would answer, you know, very quickly.
[00:38:35] Yeah, there is.
[00:38:36] I mean, like, uh, I was, I had a bidding problem recently and I asked, uh, I asked Joe grew about it and, uh, I felt, I did feel like I was kind of on borrowed time, you know, like, uh, I wanted to ask him, but I also realized that.
[00:38:55] You know, that's what he does for a living.
[00:38:56] And his opinion is, is quite valuable to me, but I felt like I was, I needed to be respectful of, you know, the, that's how he, you know, like he earns a living.
[00:39:10] So I'll, I'll tell you one story that Joe grew will appreciate.
[00:39:15] Um, so I play in, uh, a game in Florida that's run by Michael Becker.
[00:39:21] Yeah.
[00:39:21] And there are about, I don't know, 16 people who play in that game.
[00:39:27] And most of them have won national championships.
[00:39:29] It's a very good game.
[00:39:31] Um, I mean, David Berkowitz plays and Michael Becker plays and Kerry, uh, Sanborn plays.
[00:39:37] Um, and one day David said, are you going to be playing this week?
[00:39:43] And I said, no.
[00:39:44] He said, well, you should play because, um, we have a guest and he'll be the best player in our game.
[00:39:52] Meaning that he'll be better than David Berkowitz.
[00:39:55] Right.
[00:39:55] He said, who do you think it is?
[00:39:57] And you know, that could be a lot of people.
[00:40:01] I think that's, David's fairly modest and it was Joe grew.
[00:40:05] So he was saying that Joe grew would be the best player in the game.
[00:40:09] But I want to tell you something about bidding problems.
[00:40:11] And it's part, maybe part of the reason that Malcolm wanted me on his team.
[00:40:14] Yeah.
[00:40:14] Yeah.
[00:40:15] After Malcolm would play a match.
[00:40:17] I mean, he played, you know, I probably played on his team one time for each five times he played in a serious event.
[00:40:24] Yeah.
[00:40:24] He would call me up and sort of say, let me tell you, we came in second.
[00:40:29] We came in, you know, third, tied third, fourth.
[00:40:32] Let me tell you about this hand that, you know, uh, Paul got wrong.
[00:40:38] This hand that Eddie Wold got wrong.
[00:40:40] This hand that John Swanson got wrong.
[00:40:42] Okay.
[00:40:42] And then he would ask me what I would have, what I would have bid or what I would have made.
[00:40:47] And I gave my best answer.
[00:40:50] Yeah.
[00:40:50] And this is a behavioral decision point.
[00:40:52] My best answer were generally better than the answers that Paul or, uh, John or Eddie would provide.
[00:41:02] The reason being is that there was selection bias.
[00:41:05] Malcolm didn't ask me about the brilliant bids that Paul made.
[00:41:09] He only asked me about the bids that Paul made that worked out poorly.
[00:41:14] Yeah.
[00:41:14] So if I randomly chose a bid, I might choose Paul's bid, but if I chose a different logical bid, it was likely to be better.
[00:41:24] I never asked Malcolm whether he was aware of the fact that the fact that the idea that I did better than the people who had messed up meant that I was a better bridge player than they were.
[00:41:35] But anyhow, he was very nice.
[00:41:37] He was happy to have me on his team as, you know, you know, as long as we could play.
[00:41:42] So that was great.
[00:41:44] And I, you know, and I think he wanted to, you know, win more world championships.
[00:41:50] What was the world championship that he won?
[00:41:52] He won it.
[00:41:53] I don't know the year, but he won it, I think in Buenos Aires.
[00:41:57] It was definitely in South America.
[00:42:00] Okay.
[00:42:01] Do you know if it was a Bermudable or?
[00:42:03] It was a Bermudable.
[00:42:04] Yeah.
[00:42:04] Hmm.
[00:42:06] So it was a good thing to win.
[00:42:09] Was this, was this, uh, was this recently that David asked you about Joe Grew?
[00:42:16] Yeah, I would say it was a year and a half ago.
[00:42:19] Oh, okay.
[00:42:20] And Joe Grew was just, Joe Grew was just, you know, coming down to Florida to, you know, I don't know, get some sign.
[00:42:30] Because he was supposed to be, well, Joe was played in that game.
[00:42:33] I think this like a week or two ago, we were supposed to play a regional in Fort Myers last week.
[00:42:40] But obviously the Hurricane Milton, um, uh, undid that.
[00:42:46] Right.
[00:42:47] No, no.
[00:42:47] I presume he's down in Florida.
[00:42:49] He went to play in the game.
[00:42:50] What did he say about the game?
[00:42:52] Uh, well, he was more like, he was more talking about playing golf with those guys.
[00:42:58] That's the thing.
[00:42:59] These guys are all good bridge players, but they're really more interested in playing golf than playing bridge.
[00:43:04] Indeed, if you ask, um, I've asked David to, um, you know, go to a show or something.
[00:43:13] I said, he said, no, no, I can't do that.
[00:43:14] We'll interfere with my golf game.
[00:43:16] Um, and they talk about it a lot, by the way, this, in terms of, um, yelling at partners, we had, um, some players in that game.
[00:43:28] Understand these people play every week.
[00:43:29] There's usually eight people, occasionally 12 people that there were people who not only yelled at each other so much.
[00:43:37] So you'd hear it at the next table, but who refused to play with the other person.
[00:43:43] We would draw, you know, lots basically to see who was on a team.
[00:43:48] And so it was you, me, David Berkowitz and Michael Becker.
[00:43:53] And, you know, well, David and Michael got along, you know, perfectly well, but the two of them would say, we can't play together.
[00:44:00] And you'd sort of say, okay, you play with Michael, I'll play with David.
[00:44:03] Um, and it was just sort of amazing to me how much this, you know, hurt their play.
[00:44:09] And there were a number of people there who would just, you know, start yelling as soon as anything went wrong.
[00:44:14] Um, fortunately, um, uh, the mean age at that game is probably, you know, 78 and, uh, two of the worst offenders no longer play sadly, uh, because they're no longer with us.
[00:44:31] So it's a little bit like the ACBL and you sort of say, where is so-and-so?
[00:44:36] I haven't seen him in a long time.
[00:44:38] And, you know, uh, he may have dropped out.
[00:44:44] Have you played any, uh, have you played any rubber bridge?
[00:44:48] Um, I used to play in, uh, high school.
[00:44:51] I used to play, um, in a, well, we, we would have imp games, you know, at people's houses, but I used to play rubber bridge with, um, a very good bridge player.
[00:45:03] It was bridge professional named David Strasberg.
[00:45:05] And I would play, you wouldn't have heard of him, but I would play for a penny a point.
[00:45:10] And he would pay for, you know, a 2.9 cents a point or 4.9 cents.
[00:45:15] We'd play a set match.
[00:45:17] So he wanted me to play as his partner.
[00:45:20] And that was the only serious rubber bridge I played, but I wasn't playing for a serious thing.
[00:45:25] Yeah, I would play, I mean, rubber bridge if there were a good game here.
[00:45:29] You know, not for enough money that it really made a big difference to me.
[00:45:33] I mean, you know, I, I don't think when you play in, um, Michael Becker's game, uh, if you've had a really bad day, you might lose $250.
[00:45:44] Um, and I don't think rubber bridge is, you know, played by the people who play in that game for much more than that.
[00:45:53] Yeah.
[00:45:54] Those will play for poker for much higher stakes.
[00:45:57] So, but you're today, this conversation, are you in Boston?
[00:46:01] I'm in Boston.
[00:46:02] Yes.
[00:46:03] Okay.
[00:46:04] But you have, you, you, you're listed in the ACBL as a Hope Sound.
[00:46:09] You have to live, you can only list in one place.
[00:46:13] So I'm in Hope Sound and fortunately our house survived hurricanes, Milton and Helene because, in part because we are on the East Coast.
[00:46:22] By the way, I'm realistic about risk there.
[00:46:24] I tell my children that our house is for them.
[00:46:28] I tell my grandchildren this house is not for them.
[00:46:30] And it's not that I don't love them dearly, but I think that with climate change, our house, which is on the, directly on the coast, uh, may not survive another, you know, 40 or 50 years.
[00:46:45] Particularly if storms intensify.
[00:46:47] What did you think of the decision-making around COVID?
[00:46:54] Um, I thought, well, first of all, we have to decide the decision-making of the nation versus the decision-making of individuals.
[00:47:03] Okay.
[00:47:04] Um, so I think that, um, the nation, I'll give you the first example.
[00:47:10] As when COVID came along, even though Trump's not a big fan of government, we did develop Operation Warp Speed where we developed, uh, vaccines quickly.
[00:47:21] But what we didn't do at that time was we didn't build our vaccine capacity.
[00:47:27] So as soon as we started building the vaccine, we should have started to build the vaccine capacity.
[00:47:32] So as you remember, when COVID shots first became available, they were very hard to get.
[00:47:37] And they were allocated to first responders and to people who had a lot of conditions.
[00:47:42] And it was obvious that we were going to need the vaccine manufacturing capacity.
[00:47:49] So we should have said, uh, John, I'm going to get busy trying to find a vaccine.
[00:47:55] You get busy building vaccine capacity.
[00:47:58] And then if I'm successful, which may only be 50% likely, we'll be able to give people vaccine shots.
[00:48:04] So that, you know, uh, killed, ended up leading to many, many deaths, many, many, you know, uh, sicknesses.
[00:48:13] So that was, you know, sort of, in my view, a, uh, significant problem.
[00:48:19] Uh, the second thing that we did is we didn't, one of the things that, um, I'm an economist originally, worry about is opportunity costs.
[00:48:28] And we didn't worry about the opportunity cost of kids not going to school, which is, and we didn't even attend to it.
[00:48:37] There weren't articles in the New York Times of how much kids are losing from their schooling.
[00:48:42] Particularly, you know, my grandchildren did fine.
[00:48:45] They went to a school which had all its lessons online and they probably got, you know, 90% of what they would have gotten in person or maybe 85%.
[00:48:54] But the kids in the Boston public schools did very poorly.
[00:48:57] And only, you know, two years later or three years later did we recognize the vast loss of learning capability.
[00:49:05] And we didn't monitor, you know, that, uh, at all, basically at all.
[00:49:10] What people, you could have taken tests at the time to see how the kids were doing.
[00:49:17] So that was the, you know, the cost of developing the vaccines and administering them were, were, you know, trivial.
[00:49:25] And now we have lots of people who, um, you know, COVID is not around very much, at least in Boston.
[00:49:31] But I still think it's worthwhile to take a COVID vaccine.
[00:49:35] If you're someone who has a really terrible reaction, you already know that.
[00:49:39] But for the vast majority of people, they don't.
[00:49:42] Have you taken a COVID vaccine now?
[00:49:45] Not, not since, uh, I took one booster.
[00:49:48] I took like a full vaccine and then one booster.
[00:49:52] Well, I would urge you to take another booster.
[00:49:55] I think it's a rational thing to do.
[00:49:57] Um, it will take you, uh, an hour.
[00:50:01] I mean, at least our pharmacies, they'll even, if you go and you, uh, buy your, um, a Torvastatin, they'll sort of say, uh, have you had your, uh, COVID booster?
[00:50:12] Because they make, you know, I don't know, $20 when they give you a COVID booster.
[00:50:17] So there's plenty of vaccine available.
[00:50:20] It's not good against the latest, latest, it's not terrific against the latest, latest strains, but it still does provide benefit against them.
[00:50:30] And it provides significant benefit about slightly prior strains.
[00:50:36] So people, um, many people that I know, including John McAllister say, well, I won't get another booster.
[00:50:43] How many times have you had COVID?
[00:50:48] Um, I definitely had it one.
[00:50:51] I mean, I know I had it one time.
[00:50:53] Uh, I've had some friends recently that have had it, that have had sort of like a lingering kind of thing that is, uh, like friends that are my age that have had something that's kind of been pretty annoying for them.
[00:51:07] Yeah.
[00:51:07] Well, um, how annoying would it be for you to get a booster shot in the next 24 hours?
[00:51:12] Oh, very like not annoying at all.
[00:51:17] Well, maybe like there's a pharmacy like near where I live that I'm sure I could go to and get a booster like right away, more or less.
[00:51:29] Okay.
[00:51:30] Well, think, think about it.
[00:51:32] It's, it's better than the best safety play you've ever taken.
[00:51:37] For like, what is my, what is my upside of, of, of taking it?
[00:51:42] Uh, you, uh, reduce your probability of getting COVID by probably 70%.
[00:51:50] And if you do get a case, it's probably milder than, um, it would be.
[00:51:56] Is there negatives to taking it?
[00:51:59] Which you already know.
[00:52:00] Yes.
[00:52:01] COVID boosters.
[00:52:02] Some people have, uh, you know, significant adverse reactions when they take the shot.
[00:52:08] Which I have not had.
[00:52:10] But you haven't had.
[00:52:11] So you don't have to, have to worry about it.
[00:52:14] It's a little bit like, you know, you make an over call as two level vulnerable on ace, queen, 10 fifths.
[00:52:20] And you've been doubled, you know, you've gotten doubled a few times.
[00:52:23] Right.
[00:52:23] You, you learn not to do that.
[00:52:25] Um, you fail to make an over call if somebody else fails to make an over call on the ace, king, jack six times.
[00:52:32] And, uh, you know, they also learned that they didn't get to their no Trump game.
[00:52:38] So it's that sort of notion.
[00:52:40] You have, it's, this is, um, failure to update your probabilities.
[00:52:46] And the other notion is that people treat, um, the downside of, uh, you know, having a sore arm and maybe even a headache for a day as being really, you know, significant relative to the dramatic upside of avoiding the thing.
[00:53:08] Now, one of the problems with, uh, vaccines is you never know whether it protected you.
[00:53:17] Otherwise you didn't get, you got COVID once you got a booster.
[00:53:21] You didn't get COVID.
[00:53:22] Well, maybe it's because you didn't come in contact with somebody who had COVID.
[00:53:25] And maybe it's because you did come in contact, would have gotten it, but didn't get it because of the vaccine.
[00:53:31] But nobody tells you that was a great thing to do.
[00:53:36] Right.
[00:53:39] What I'm telling you that now.
[00:53:41] Okay.
[00:53:41] I, I, I, I, I'm, I'm seriously considering it.
[00:53:44] I've almost, I've, I've come close in my mind to committing to do it, but I haven't quite committed to do it.
[00:53:50] Like I was close to committing to do it.
[00:53:53] Uh, do you want to keep, do you want to, do you want to make one final push?
[00:53:59] Oh, you mean on the COVID vaccine?
[00:54:02] I'll tell you, I'll tell you how you might do it.
[00:54:05] Um, do you go out to dinner often?
[00:54:37] Yeah.
[00:54:40] I like to, you know, get these stories that I can tell in my class.
[00:54:46] Um, so, um, I think that makes it a little bit more likely that you'll get a COVID shot.
[00:54:53] Are you coming to the, the upcoming Las Vegas NABC?
[00:54:57] I can't because, um, I have to teach.
[00:55:01] And it, you know, it just takes me too far and it's the end of the semester.
[00:55:04] Oh, so you were at the, you're, you were at sabbatical last fall.
[00:55:07] That's how you were.
[00:55:08] That's sabbatical.
[00:55:09] Yeah.
[00:55:09] We get a sabbatical once every seven years.
[00:55:11] I see.
[00:55:12] So the other thing that's nice for me is that the fall national is usually played in a distant
[00:55:18] locale for us.
[00:55:21] So that works out well for me because that would have been harder to get to anyhow.
[00:55:26] So, but I, I hope to see you in Memphis.
[00:55:30] Who are you going to play with in, uh, in Las Vegas?
[00:55:33] Uh, so I'm playing with Simon Holt.
[00:55:36] Uh-huh.
[00:55:36] That's a good person to play with.
[00:55:38] Yes.
[00:55:39] He, uh, somebody asked a top Swedish player who the best player in Sweden was in front of
[00:55:50] me.
[00:55:52] And Simon Holt wasn't said as the top, but he was said as one of like the top three.
[00:55:57] Yeah, we, I've played a few.
[00:55:59] Um, when I played with Marion, we played against him a few times.
[00:56:02] He's always played very well, but you can't tell from 20 hands whether someone is terrific.
[00:56:08] But in Sweden, um, they have a, uh, game where they get an infinite number of tables and they
[00:56:16] play all the time.
[00:56:18] So it's no surprise that Sweden has a lot of very good bridge players.
[00:56:25] Can you give me an example of where you made a decision playing bridge recently where you
[00:56:34] you feel like in retrospect, you really made a poor decision?
[00:56:41] Well, I make, um, I'm not sure that I remember, you know, I'm not good at remembering hands.
[00:56:50] Yeah.
[00:56:51] Um, but I think that, uh, I am, uh, too much of a pussycat when it comes to preempting and
[00:57:00] I preempt, I would say that I'm at the 80th percentile meaning towards more aggressive than
[00:57:07] people.
[00:57:08] But, uh, I think that I should be at, you know, I should move to the 90th percentile of good
[00:57:15] players because I just think that it works out.
[00:57:18] Well, it's very much of this notion of loss aversion.
[00:57:22] You know, it's really embarrassing when you, you know, go for 800 against a, uh, vulnerable
[00:57:29] game.
[00:57:30] Um, and people, you know, when your partner could say, what the hell were you doing?
[00:57:34] So that would be, uh, you know, the situation.
[00:57:40] Um, I think that I tend to also use splinter bins too rarely.
[00:57:48] I think they're, you know, uh, quite valuable.
[00:57:52] Um, and I don't use them, you know, use them enough.
[00:57:57] Um, there's some things that, uh, well, I mean, I could give you many hands where, uh, I didn't,
[00:58:07] you know, play or defend optimally.
[00:58:10] Um, I actually think that, um, which is rare for a serious player.
[00:58:14] I think my defense may be as good as my dummy play because I'm quite sensitive to playing with
[00:58:20] very good players and have sort of learned how, how they play.
[00:58:26] And I feel very comfortable on defense and some people get very nervous because obviously
[00:58:31] you don't know partner's hand or declarer's hand, but I say, I'm going to be willing to
[00:58:37] do this and I'm going to be willing to go wrong.
[00:58:40] So that's, you know, my general approach to, um, matters.
[00:58:46] I also have a philosophy, which, uh, the only, I think that Yara scribes to this.
[00:58:54] Um, but I think that, um, even, uh, the best players suffer when they have a, such a complicated
[00:59:05] system, not that they forget it, but that it, um, takes up, uh, you know, their, their brain
[00:59:13] capacity.
[00:59:14] And that's one of the worst things about being loss averse.
[00:59:18] Otherwise you and I just have a hand.
[00:59:20] Uh, we didn't get to slam.
[00:59:23] We should have gotten there.
[00:59:24] You could have Q bid.
[00:59:25] I could have Q bid.
[00:59:27] Everything's, you know, and I'm sitting at the table sort of saying, was that really John's
[00:59:31] fault?
[00:59:31] Was that really my fault?
[00:59:33] I'm going to, I believe do worse on the next hand, not because I'm feeling bad.
[00:59:38] It's just because I'm trying to parallel process and I should be single process.
[00:59:44] Hmm.
[00:59:45] And, um, I think that, you know, people aren't very good there.
[00:59:51] Do you know about the, uh, gorilla film?
[00:59:55] No.
[00:59:56] Okay.
[00:59:56] So look, look this up.
[00:59:59] There's a, uh, the original film was made at Harvard, uh, that, and you should look up
[01:00:06] on the internet and you'll find it.
[01:00:10] And then you should provide it to your listeners.
[01:00:13] So there are a group of kids, um, in a room and they're, uh, playing basketball.
[01:00:21] And some of the kids have, uh, black shirts and some of the kids have white shirts.
[01:00:27] And you're told to, uh, count the number of, they're throwing the basketball around,
[01:00:33] count the number of passes and maybe even count the number of passes in the air and count
[01:00:37] the number of, uh, bounce passes.
[01:00:40] And then a person in a gorilla suit walks amidst the players.
[01:00:47] I mean, he walks right in the group, counts his chest and walks on.
[01:00:52] And then you ask, I sort of say, John, how many passes and how many bounce passes were there?
[01:00:57] You say, I think there were 11 passes and seven bounce passes.
[01:01:01] I said, did you see anything different?
[01:01:04] Anything unusual?
[01:01:05] You said, yeah, well, the one guy passed it most of the time and I sort of say anything
[01:01:11] else.
[01:01:11] And you don't see the gorilla.
[01:01:14] Yeah.
[01:01:15] And there are lots of other videos that are like this.
[01:01:18] Yeah.
[01:01:19] And that's the way I think it is when I'm worrying about the last hand that, and that's taking
[01:01:26] up some of my mind space and I can't focus on this hand.
[01:01:31] And generally that doesn't matter because, you know, you know, 90% of your bids are pretty
[01:01:38] prescribed and 90% of your plays are pretty prescribed.
[01:01:41] But when there's one that's not prescribed or when there's a thing where you should sort
[01:01:44] of say, now's the time to stop and think you're not going to do it.
[01:01:49] So, I mean, that's pretty convincing that we're poor decision makers.
[01:01:53] Now, unfortunately, anybody who listens to this and looks at the gorilla video, I'll send
[01:01:59] it to you if I can find it, will now know what to look for.
[01:02:04] So, they're going to have to show it to their boyfriend or their girlfriend or their spouse,
[01:02:09] their child.
[01:02:10] Right.
[01:02:11] So, I think that that's part of the, also a problem of having an extremely complex system.
[01:02:18] There are some people who I, for whom it makes no difference whatsoever and they can
[01:02:23] easily, you know, absorb the entire system.
[01:02:27] But I'm not one of those people.
[01:02:30] What's the nature of this Munger quote that I opened with?
[01:02:35] Well, I teach a course called Behavioral Decision, Investment Decisions and Behavioral Finance.
[01:02:43] It's an executive program and we've run it for 30 years and Charlie was my first dinner speaker.
[01:02:55] And, you know, I suspect we may have discussed bridge a little bit because his partner, you
[01:03:03] know, Warren Buffett was such a serious bridge player or is a serial player so often.
[01:03:08] Yeah.
[01:03:10] But I'm not exactly sure where he got that from.
[01:03:15] I hope he got it from, I hope he got it from, you know, Paul Soloway.
[01:03:23] I'm not sure that that's the case.
[01:03:26] Is this the thing that just happened recently?
[01:03:28] Because I saw Annie was like, you just did like a two-day executive program?
[01:03:35] No, Annie, we're doing it next week and Annie will be, Annie's come up to talk to our group
[01:03:44] and then she's talked to our group online and she's going to talk to our group at lunch again
[01:03:49] online.
[01:03:49] By the way, don't think of her as just a professional poker player.
[01:03:54] She also very recently finished her PhD, which she started, you know, 25 years ago.
[01:04:01] Very unusual to finish a PhD at her age.
[01:04:05] And she's just a super smart and super entertaining woman.
[01:04:10] And she writes, you know, very, you know, entertaining and in my view, instructive books.
[01:04:19] So I would, you know, her most recent book was Quitting.
[01:04:23] You know, I thought that that book was interesting that people don't quit their, you know, activities
[01:04:28] often enough.
[01:04:30] And, you know, I like to talk to her.
[01:04:32] We often have conversations that will go on for quite a while when we discuss that.
[01:04:39] I think I suggested to her that she should try, write a book called Trying.
[01:04:44] This is the notion of getting option value.
[01:04:48] Let me tell you a story that has nothing to do with Bridge, but I can relate it to Bridge,
[01:04:53] which is, let's assume that your favorite restaurant in Charlottesville is a Thai restaurant.
[01:05:01] And you go there once every, you know, two weeks.
[01:05:06] And then a new, it's called Lotus Blossom.
[01:05:09] And then a new Thai restaurant opens up, which is called, you know, Bangkok Bistro.
[01:05:17] And so he says, hey, you know, Bangkok Bistro is really good.
[01:05:20] And you sort of say, no, I like Lotus Blossom.
[01:05:23] I'll continue going there.
[01:05:25] Well, my view is you should try Bangkok Bistro at least once or twice because you might like
[01:05:31] it better.
[01:05:32] And even though in expectation it will be worse than Lotus Blossom, maybe over, if it proves
[01:05:40] to be better, you can then go there another hundred times.
[01:05:43] So you're getting an option value.
[01:05:46] The same thing is true about Bridge systems.
[01:05:50] For many years, you know, playing with Charlie Kuhn, I played Go As You Please.
[01:05:56] It was going to be when you come back to Bridge after a hiatus, it's going to be hard to play
[01:06:02] two over one and forcing no Trump and things that you've never played before.
[01:06:06] But I immediately said, you know, I could have had Paul Soloway play my system.
[01:06:12] I immediately said, this is, there's option value here.
[01:06:17] If I like it and I'm able to play okay with it, I will switch my system.
[01:06:22] So I switched my system.
[01:06:24] The idea that I should switch some minor treatment would not be a good idea because that would
[01:06:31] take mental capacity and would never come, would come up so rarely that it's not worth it.
[01:06:37] So I think a big switch in system, you know, might be worthwhile.
[01:06:44] So if I were going to live for another, if I was going to play Bridge for another 10 years,
[01:06:50] I probably would try out a system where I open up a club with two card suits and transfer it
[01:06:57] to one level.
[01:06:59] I think theoretically that's a superior system, but it would take me a little bit of a while
[01:07:05] to get comfortable with it.
[01:07:06] And I think its advantage is not as great as the advantage of two over one relative to
[01:07:12] go as you please.
[01:07:13] And I may be wrong.
[01:07:15] You know, like I had like a question I was going to ask you, like up until one sentence
[01:07:23] prior to you.
[01:07:24] I can't remember the question you're going to ask me.
[01:07:28] I know what it was.
[01:07:30] Have you ever invited Annie to play Bridge with you?
[01:07:36] No, I'm not sure.
[01:07:37] Does she even play Bridge?
[01:07:38] I'm not sure.
[01:07:39] So she played Bridge when she was younger, but I, and I asked her this in the, in the
[01:07:45] thing where it came up, where your name came up, but she says she doesn't have anybody
[01:07:49] to play with.
[01:07:51] Yeah, no, I, I would be happy to play with Annie, but I have a difficult situation in
[01:08:00] Florida where I play in Florida.
[01:08:02] There's a club that, you know, that has tennis, which is what we play and eating and stuff like
[01:08:08] that.
[01:08:09] They have a Bridge game every Saturday and everybody in the Bridge game, not everybody,
[01:08:14] many people sort of say, Oh, would you play with me sometime?
[01:08:17] Would you play with me sometime?
[01:08:18] And I sort of made a rule of, um, I'm not going to, uh, play with, you know, other people
[01:08:26] unless there's a very good excuse.
[01:08:27] There's one guy I play with.
[01:08:29] He plays fewer conventions and treatments than anybody else, but he's the best natural bridge
[01:08:35] player.
[01:08:36] And I don't try and change his game.
[01:08:39] Um, but, uh, the only thing that we've done, which is incredibly valuable is we now play,
[01:08:46] um, you know, almost all low level doubles are for takeout.
[01:08:51] It's the one thing I've got him, you know, to change.
[01:08:54] Um, but we don't really know what one no Trump has three hearts means.
[01:09:00] I mean, it's undefined in our system.
[01:09:04] Um, but it's the idea of, uh, you know, what is the appropriate etiquette when, you know,
[01:09:12] a student in my school says, Oh, I hear you're a good bridge player.
[01:09:14] Would you be willing to play with me sometime?
[01:09:16] Right.
[01:09:16] And I say, I'm sorry.
[01:09:18] I have an absolute rule.
[01:09:19] I don't play with students who do this.
[01:09:21] If someone, um, you know, a really terrific player came along, um, I would probably say,
[01:09:30] except if you've already won a national championship.
[01:09:34] So I, I have played, um, a few times with, uh, I know you've played with Michael shoe and
[01:09:40] I've played with Michael.
[01:09:41] Michael who's, you know, uh, a very, uh, good thing.
[01:09:46] Um, I tried to, uh, get Finn Klesnick into Harvard saying that he was a terrific bridge
[01:09:52] player, but he wasn't except he wasn't accepted, but I would have certainly loved to have played
[01:09:57] with him.
[01:09:58] Right.
[01:09:58] Um, but, um, you know, uh, there's a real notion also of being gracious to people, but not,
[01:10:07] you know, I could play in Florida.
[01:10:08] I could play with a different player every week.
[01:10:12] Yeah.
[01:10:13] Um, never really enjoying it.
[01:10:16] I understand.
[01:10:17] But Annie would be different.
[01:10:19] You, so you said, uh, she said she likes playing bridge by the way, but she just doesn't,
[01:10:24] doesn't, I think she just, it's more that she doesn't have, it doesn't come up for her.
[01:10:28] You know, it's like, she doesn't have the opportunity to play.
[01:10:31] Uh, you said Malcolm was number one in his class at Yale.
[01:10:35] Uh, you, you graduated summa cum laude from Harvard.
[01:10:39] Do you know what your class rank was at, uh, they don't tell us our class rank.
[01:10:44] Ah.
[01:10:45] There are a number of people, um, who, uh, you know, are identified as having graduated
[01:10:52] first or third in their class at Harvard and they're making it up.
[01:10:57] Um, so, um, I don't know where I was in my class, but I'm sure it was fine.
[01:11:06] Uh, I have to say, uh, I'm going to, so you, you suggested this, uh, article investing in
[01:11:12] the unknown and unknowable as the most relevant of the articles you've written for me.
[01:11:16] Right.
[01:11:17] And, uh, and I just want to say that, uh, I was a pretty mediocre student at the university
[01:11:23] of Virginia.
[01:11:25] And I think that if I'd had the opportunity to learn from you when I was in college, I really
[01:11:31] would have enjoyed it because, uh, I've got, you know, some highlight, you know, I really,
[01:11:36] I really endeavored to understand the material that you shared.
[01:11:41] And, uh, I just want to say it was a real, it's been a real pleasure to get to engage with
[01:11:47] you, uh, both, you know, in person through email, but also, uh, through your scholarly
[01:11:54] works.
[01:11:55] And, uh, I'm, you know, very excited to, to see you at, uh, at the Memphis NABC.
[01:12:03] Hopefully we'll, we'll be playing against each other in the finals of the platinum pairs.
[01:12:07] I'm going to play with Joe Grew in the platinum pairs.
[01:12:10] So that's, uh, that's a, uh, well, better than anybody in, uh, Michael Becker's game,
[01:12:17] which includes, and since I play in Michael Becker's game, that includes me, that includes
[01:12:22] David Berkowitz.
[01:12:23] No, Joe Grew is, um, an incredible player and also a very personable person, which I take,
[01:12:29] um, by the way, I should stress, um, all the people that I play with, I really enjoy,
[01:12:36] or I wouldn't play with them.
[01:12:38] I mean, I'm including of the professional and each of them has a very different, many,
[01:12:44] some of them are quite quirky, quirky personality.
[01:12:47] Um, but in my theory that bridge should be fun.
[01:12:51] If you don't enjoy playing with someone, you shouldn't play with them.
[01:12:56] I mean, it's just taking up too much of your life.
[01:12:59] But anyhow, thank you so much for this interview.
[01:13:01] Um, I learned something from, uh, being questioned, including some questions that I realized I didn't
[01:13:07] do so well on.
[01:13:09] Interviews are sort of like bridge.
[01:13:11] You're more concerned with your weak answers than you are with your brilliant and incisive
[01:13:18] answers.
[01:13:18] So thank you, John.
[01:13:20] Well, um, it's been a pleasure.
[01:13:22] And I think, uh, you know, I'm looking forward to the opportunity, like there's some pressure
[01:13:27] here, like as an interviewer, like I've got this erudite, uh, you know, real legend of Harvard
[01:13:34] university, 50 years at the Kennedy school.
[01:13:37] So I feel some pressure to really bring you out in the best way possible.
[01:13:42] And, uh, whether or not I've done that, I would, I would agree that I am tending to focus
[01:13:48] on my mistakes a little bit, but, uh, I'm really excited to, you know, have dinner at
[01:13:53] Bangkok Bistro with you and, uh, talk about the hands.
[01:13:58] Good.
[01:13:58] Okay.
[01:13:59] Can I make a suggestion for you before you put this on that?
[01:14:02] Uh, I get no royalties.
[01:14:04] There's a, uh, book on, um, Amazon called maxims for thinking analytically.
[01:14:11] Okay.
[01:14:12] It was edited by my friend, uh, Dan Levy, L E V Y.
[01:14:18] And it's lessons from legendary Harvard professor, Richard Zeckhauser.
[01:14:23] Oh, and, and it will, I think provide, um, you know, a number of insights into the way
[01:14:31] I, you know, the principles I try and teach my students.
[01:14:35] So I think you'll, you know, you might employ one of those lessons when you present this.
[01:14:41] And I've even had the following experience.
[01:14:44] I don't know if you do this.
[01:14:45] Um, but, uh, I've been interviewed not on bridge, but just on, you know, life or on what
[01:14:54] we should do about current events.
[01:14:56] Yeah.
[01:14:56] And I've given an answer and then I've seen the interview and the interview has spliced
[01:15:03] in a very incisive question ahead of my answer.
[01:15:08] So, you know, that's the type of thing that you, you might conceivably do.
[01:15:13] So I say in your book of maxims, you say such and such, can you explain why this is important?
[01:15:21] And then I'll give an answer that would go along with your question.
[01:15:24] I've already given an answer that would go along with your questions.
[01:15:27] So get, get this book.
[01:15:29] I think it costs $10.
[01:15:30] All right.
[01:15:31] And as I said, my friend Dan gets the royalties for this, not me, but I, it has quotes from
[01:15:39] all the people who've written articles with me or have been my students.
[01:15:44] So I'll, I think you'll find it interesting.
[01:15:48] Okay.
[01:15:49] Okay.
[01:15:50] Thank you, John.
[01:15:51] Terrific to talk with you.
[01:15:52] I'll be in touch when this is, when we've got this edited and ready for publication and
[01:15:58] I'll let you know.
[01:15:59] Good.
[01:16:00] Thanks.
[01:16:00] Okay.
[01:16:00] Bye-bye.
[01:16:01] All right.
[01:16:01] Thanks.