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.

*intro written by ChatGPT

[2:24] On Michael Rosenberg – his love and encyclopedic knowledge of the game of bridge.

[5:27] One of the most important things in bridge – maximizing expectation rather than minimizing regret or behavioral decision-making.

[9:24] Bridge is a game of mistakes.

[11:03] Zeckhauser recommends Boye Brogeland’s approach to bridge.

[15:07] Recollection bias.

[17:54] A significant change to his game he recommends.

[20:53] John did his homework: They discuss an article written by Zeckhauser.

[26:04] Post-1972, Malcom Brachman.

[32:25] “Sidecar investing” and how it relates to your bridge partner; the skills of decision theory, bridge and investing.

[39:10] A story Joe Grue will appreciate.

[46:14] Being realistic about risks and the decision-making about COVID.

[56:25] Zeckhauser’s weak spot.

[1:03:01] Annie Duke – more than a professional poker player.

[1:14:00] A book recommendation.

John McAllister: Hi, my name's 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. He is the Frank P. Ramsey professor of Political Economy at the Kennedy School of Harvard University. I am blowing this introduction, Richard. I mean, you have an amazing resume. And Charlie Munger, Warren Buffett's longtime, esteemed business partner said, "The right way to think is the way Zeckhauser plays Bridge. It's just that simple.” So you've made your mark in the academic world, you've made your mark as an investor. I was in a decision-making class recently online with a woman named Annie Duke, who's a professional poker player, and she was talking in a office hours about next steps, and she mentions your name as somebody that people could study under for how to make better decisions. And so this conversation is coming from based on that. Because I know you, I played against you. This is the most we've ever talked, but I'm delighted to have you as my guest on this podcast.

Richard Zeckhauser: Thanks so much, John. Pleasure to be here. I hope you won't ask as hard questions as you are when you're a defender.

John McAllister: Well, one of the things that I like to do is reach out to guest bridge partners and I reached out, I saw that you played with Michael Rosenberg, Boye Brogeland and Geir Helgemo recently in some of the NABC pair games. And Michael Rosenberg got back to me and what he said was, "If I could describe Richard in one word, it would be erudite."

Richard Zeckhauser: Geez. I thought that Michael was pretty perceptive, but I guess not. 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 highly complex things, and then I'll ask him about some real world puzzle, mathematical problem, something that happened in current events and see how he thinks about it. And it's always an interesting sort of exchange of things. 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. And the other notion is he is the most experienced bridge player that I've ever encountered. I sort of say, "Michael, I just saw the most beautiful play." Maybe when we're going over the hands after something or other, he said, "Oh, I encountered that in the 1983 Camrose Cup," whatever else it is. So he's seen all the plays, which makes it a lot easier to play.

John McAllister: How many times do you think you've played with Michael?

Richard Zeckhauser: I've played with Michael more than with any other leading player, probably 18 or 20.

John McAllister: And you guys were in the Blue Ribbon Pairs, I think it was. You guys were in second place going into the final session?

Richard Zeckhauser: Yeah, I have a lot of second places going into the finals. As I understand it, the score that's at the end that matters. I had an interesting experience with Geir Helgemo which was after three sessions in a row in the Blue Ribbon Pairs, including the final session we were in 9th place. Last fall, we were in 9th place. It was a very unusual situation, Geir got knocked out of the Soloway event in the first round or something like that. So I said, "Hey, would you like to play in the Blue Ribbon Pairs?" He said, "Sure." So we played the Blue Ribbon Pairs, and then we couldn't move up and we couldn't move down. So we just ended up 9th. And it was pretty good. I mean, there were almost 300 pairs.

John McAllister: How do you play Bridge? You're still a professor at the Kennedy School. Is that full-time?

Richard Zeckhauser: I'm a full-time professor, yes. And the answer is not very much. For example, I can only play in the pair games at the Nationals because I have to work, which is too bad, and I can virtually never play in the fall Nationals. Last year I was on sabbatical, so I was able to play with Geir, which was fun, and he's just incredibly creative in what he does. So frequently, not quite sure what's going on but it's great fun, and you feel pretty good. I was going to say, one of the most or the most important thing to me about Bridge is the partnership aspect.

And one of the things that you really have to do is you have to be willing to maximize your expectation rather than minimize your regret. Let me tell you what I mean by that. Maximizing your expectation means you're going to maximize your score. If it's an IMP, you're going to maximize your expected IMP score, but sometimes people don't like to do something which could work out very poorly and you're regretted a lot and your partner's going to say, "You did something stupid." Or you're going to say to yourself that, "I did something stupid." And you have to get over that and think about, even though I have a 20% chance of losing 10 IMPs, if I have a 50% chance of gaining five IMPs, that's going to be worthwhile in a long match. And people don't like to do that. We're going to talk, I think a little bit about behavioral decision making.

And the pioneers in that field were two people named Tversky and Kahneman. Many of your listeners have read Kahneman's Thinking Fast and Slow, and their major contribution was something called Prospect Theory where they found that people value small losses much more than they value small gains. If you ask an intelligent person, American Bridge player, will you take a 50% chance of winning $10 as opposed to against a 50% chance of losing $8? They say, "No, no, I don't want to do that." Well, if that's your attitude, you're not going to do very well at Bridge. And sometimes that requires you're doing something that will look foolish after the fact.

John McAllister: Can you think of an example of you or Geir doing something like...

Richard Zeckhauser: Well, I'll give you an example from my time I played with Boye Brogeland, which was last year, last spring. We were in the third session of the Platinum Pairs, which is the final session, and the bidding went ... I passed, we're non-vulnerable versus vulnerable. It goes pass, a heart and Boye overcalls 1NT, and the next person bids two hearts.

And I have a reasonable hand, and I say, "Double," which is just values with us. And it goes pass and Boye bids three diamonds, okay? Now, this was the first time that we had played together, and in our system discussion, the word psych never came up, okay? And so it went pass and I had to decide whether I had a sufficient number of points. That despite the fact that he had never psyched in two and a half sessions and we had never discussed psychs, that he might've psyched. And I eventually decided to pass recognizing that he might very well say after the session, "You should know I would never psych with a new partner without discussing it." And it worked out well. I mean, he made three diamonds, we got a good score. He had seven diamonds to the Ace Jack.

And I think that there are lots of situations that are like that, and I've studied behavioral decision enough that I don't feel uncomfortable when I do this. I'll tell you something that a difference between playing with Michael Rosenberg and Geir Helgemo, who are clearly two of the world's great players. Michael says that no one is a good Bridge player, okay?

John McAllister: Mm-hmm.

Richard Zeckhauser: And what he really means is is that if you look over 26 boards, almost every Bridge player, no matter how good will have made some things that in retrospect look like mistakes. And that's because Bridge is a game of mistakes, which makes it by the way, in my view a worst game. Another thing that I do is I play tennis.

Tennis is a game of mistakes. Even for the world's best players, they have many more mistakes than they have winners usually. So that makes you a little bit unhappy if you believe in loss aversion that downside things are worse than upside things. So after the session, you're with Michael, you'll go over the hands, but we rarely discuss the hands where we got our suit preference signals right even though there were subtle, we bid to the right slam, so on and so forth. We go over the things that we did poorly.

Geir Helgemo, and I've played with him probably four times. And after the session, he'll sort of say, "Okay, if you want to, we can discuss the boards." I mean, he doesn't care. I mean, his view is I'm a great Bridge player. You are a very, very good Bridge player. Nothing really is going to be gained by this. Anything that we discussed won't come up anyhow. And I would like to recommend actually the approach of Boye Brogeland, which I think is the best approach to Bridge. And I got this from reading the book about him called On the Edge or Bridge on the Edge, which is you should play Bridge to have fun. I mean, there's so many frustrating aspects about it that if you play to have fun, that doesn't mean you're not playing seriously. But after you get through the game, you sort of say, "Thanks, John. I really enjoyed that. That was so terrific and we had some good defenses, and I like your witty remark to Joe in the third round, and thanks for getting me the doughnut." I think that's the way you should think about. So you asked me when I play or how I play?

John McAllister: Yeah.

Richard Zeckhauser: The answer is I started playing as a kid when I was 11 years old. I played a lot in high school. We had 12 players in my high school out of... It was a class with 540 kids in each class who were good players. Almost all of them played ACBL tournaments. And then in college I started playing with Charlie Coon, who was a great natural Bridge player, almost the opposite of some of the people that I played with now who like to have elaborate systems. And we did something which relates to this absorb your losses easily. We had a lot of preemptive jumps. And in the 1960s, mid-50s, not very that many people played that way. So that gave us a, I think a significant advantage aside from the fact that Charlie was a great natural Bridge player. So we won the Blue Ribbon Paris.

We won quite a few regional events. We came in second in some national events. Then I had a family, and I sort of hardly played for 20 years, played maybe one national and one regional event a year. And then when my kids were grown up, I started playing again. The first serious experience I had was playing on Malcolm Brachman's team where I was neither paid nor paying. I was the only person on the team was neither paid nor paying. And that was great because I got to play with Paul Soloway and I got to play with Eddie Wold and I had to change the style of Bridge that I played because they played two over one and they played much more elaborate systems.

And what I played wasn't as elaborate as they played with their best players. That's right. But that was a terrific experience. And then many years later, I played with people like Michael and Geir and Boye a little bit, and now I get to play in two nationals a year. I play in one regional near here a year, and I play online most frequently with a terrific player named Marion Michilson, who's a Dutch woman who lives in Sweden. And she always gets us a good pair to play against. So that's-

John McAllister: You'll just play a match of 20 boards?

Richard Zeckhauser: We'll play a match of 20 boards, and we always play something that was played in the European championships or the world championships. So you could see how you do. And I think more than held to our own against many of the world's top players. So that's fun. And I think I may have a slightly selective memory and not remember the times that we lost handily, but I think that's what you're supposed to do.

John McAllister: That's recollection bias, right?

Richard Zeckhauser: Well, that's not quite recollection bias. Recollection bias is that when something very unusual happens, you think you knew that it was likely to happen, or you misjudge what you thought. And also, to some extent, recollection bias is you don't really update your probabilities very well. If you thought you knew that it was going to happen, when it happens then you don't change your assessments sufficiently. I mean, reading Kahneman’s Thinking Fast and Slow, you'll discover many things like this that you do. I mean, of course, he discusses the ones that he or he and Amos Tversky came up with, but that's a good place to start.

John McAllister: So you played with Geir last fall in the Blue Ribbon Pairs it was because he got knocked out of the Soloway. What was your plan that didn't happen? What was your plan? Who were you going to play with?

Richard Zeckhauser: I was going to find somebody who was knocked out of the Soloway. I figured I would be able to find a good partner and possibly someone that I knew. One of the embarrassing things for me in going to the Nationals is John McAllister will know there are 400 people there and I'll know 80 of them, I'll know 80 people. But Marion was actually the one who sort of said, "Oh, Geir got knocked out. I asked him if he wanted to play with you." He said, "Yes." I said, "Oh, that's great. Yes, I'll play with Geir." We had a 12-minute discussion as to what we were going to play. As far as I can remember, we didn't have any significant misunderstanding because he plays very naturally, so that makes it easy to play with him. But we're giving up a lot by not having some of the understandings that I'm sure you have with your partners.

John McAllister: So what do you and Michael play then?

Richard Zeckhauser: Michael and I have a system that... Yeah, we play two over one. He claims that a lot of the treatments are mine, but I know that they're overwhelmingly his and we've agreed to disagree about that particular element of the game. And the one thing that Michael has significantly changed my game that I can recommend to everybody is he sort of said, "We just play a lot of suit-preference signals." And my guess is of his criticisms of me after the game, 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." Because as subtle as normal suit-preference signals are, he can be more subtle still. But I'll also say that in our many times of playing together, Michael has never had a harsh word, and I've never had a harsh word. And one of the things that amazes me about Bridge experts is that many of them can't control their criticisms of their partner.

I mean, it's one thing to sort of say, "You should have recognized that my three-two of clubs meant such and such” is very different, which is “I've told you this a thousand times," type of notion. I mentioned Malcolm Brachman and Paul Soloway. So, I saw Paul play with Malcolm on many occasions. Paul was a great player. Malcolm was not a great player. 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. I've told you …" things like that.

I don't think -- maybe Malcolm was a masochist, but it struck me as being somewhat bizarre. 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 five Bridge players was playing with another super player and playing against us. He yelled at his partner, and I thought it was just bizarre. It was a new partnership or relatively new partnership, but 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.

John McAllister: Yeah. I mean, that's good for me to hear because sometimes I succumb to that.

Richard Zeckhauser: Well, I suggest wait until the bathroom break, go into the bathroom, go into a stall and yell at the toilet, and you can say, "You stupid thing."

John McAllister: In preparation, I always like to brag about how well I prepare for these interviews. And so you suggested one article that you had written called “Investing in the Unknown and Unknowable.” And I used to work for a hedge fund and we were a quant fund, and my boss used to sort of... He didn't think much of the efficient market hypothesis. In paragraph 15-1-1 of this article, I would say that in one sentence, you essentially shot down the whole efficient market hypothesis. The sentence was, "When the probabilities of future states of assets are known as the efficient market hypothesis posits, why is investing involves solving a sophisticated optimization problem?" I also reached out to Boye and he told me about the psych that you fielded, but he also said that he was happy to play with you in the Platinum Pairs in Memphis, and that I should say that to you.

Richard Zeckhauser: Oh, that's good news. I mean, there's another notion in behavioral decision, which is that people pay a lot more to go from a 3% probability to a zero probability than they would to go from a 10% probability to the 3% probability. So that if you ask someone, you have a dread disease and we can cut its incidence from 10 to 3, what percentage of your future lifetime income would you give up? It tends to be less than they would pay to go from 3 to 0. So Boye told me a little while ago that he would like to play, but he wasn't sure he could play, but he thought it was likely. So I thought that was 3%, but now it's down to 0%, not quite. So do you know the reason that I play with Boye?

John McAllister: Yeah, I do actually. Yeah.

Richard Zeckhauser: Yeah. I mean, so you can do it yourself, but basically I was supposed to play with Geir. Geir's Visa got screwed up. He wrote to me, and he said, "There's bad news and good news. The bad news is I can't get into Canada. Though I've gotten into the United States many times. The good news is that Boye would like to play with you." So I said, "That will be fun." And that's what we did. We had slightly more preparation than I did with Geir, and he has a lot of treatments. I got this more from reading the book about him that are, I think quite useful that we didn't play, but maybe we will going into the future.

John McAllister: Because he told me this and he thought it was quite humorous that I would ask you or that I would tell you that he was available to play like...

Richard Zeckhauser: Well, I'll laugh then, but it's useful. But you should understand that the way I learned, I mean... This may be my future relationship with Boye. I mean, the first time I only learned-

John McAllister: Oh, from Geir.

Richard Zeckhauser: ... the day before that I was going to be playing with him. And the second time, I think we both enjoyed our game and I think we both thought that we could do better. So we sort of said, "Well, we'll try and play again in the future." And then I read his book and that made me want to play with him more, not because he made so many great plays, but because I thought his philosophy was a good one. And so now I know, but now I'm at 1%. I didn't really get to 0%. By the way, in one of my papers, I refer to getting to zero as zero worship, and people really do worship getting to zero on their risks.

John McAllister: Why do you stay zero in this case with Boye? I don't understand how you're...

Richard Zeckhauser: No, what I'm saying is you said he was going to play.

John McAllister: Yeah.

Richard Zeckhauser: I think that when the guy has to come from Norway to get to Memphis, there's some chance that something will go wrong. So it's 1%, and I'm older than the average Bridge player, even though the ACBL is aging a year per year. And I tell people, "Look, there's a 10% chance that my wife or I will be sick, but I almost certainly will let you know a month in advance." Thus far that hasn't happened, but anybody can get COVID - type of notion.

John McAllister: So you stopped playing, like you won the Blue Ribbon Pairs and...

Richard Zeckhauser: I played until about 1972. I played mostly with Charlie, but then I would only play maybe one national year, one regional year. I would play locally because my kids were around. I don't know if you're married, but if you're married, you have to more or less get a little bit of permission to play unless you're a professional Bridge player. So, that was my situation. And then just as my kids were getting reasonably old, I started playing with Malcolm.

John McAllister: And how did you and Malcolm become friends or become Bridge partners?

Richard Zeckhauser: Well, I met him at a Bridge tournament originally. Let's do this in a nice way. Given his Bridge ability, he was the smartest person that I knew. Meaning I can take a level of Bridge skill and see how smart you were. Malcolm was first in his class at Yale, majoring in physics.

John McAllister: Oh, wow.

Richard Zeckhauser: So he was a really super smart guy. He wasn't a terrific Bridge player, though he did win a world championship.

John McAllister: But he was a super successful like he owns Seagrams, right? He wasn't? Was that-

Richard Zeckhauser: No, no. He didn't own Seagrams. He was an oil man, and he owned an insurance company. You're thinking of Bronfman B-R-O-N-F-M-A-N. He's Brachman B-R-A-C-H-M-A-N.

John McAllister: Okay.

Richard Zeckhauser: And he was a lovely, lovely man. We were good friends. I think we were good friends in part because he was an intellectually liked hanging out with a Harvard professor. I liked hanging out with him. He was just a lot of fun. So that was good.

John McAllister: Did he live in Boston?

Richard Zeckhauser: No, he lived in Dallas. And it was interesting, I mean, he had a tiny oil company. Maybe he had 20 or 30 people working for him, but he was just very, very good at drilling oil wells and having the oil wells be successful. My wife and I invested with him three times. He had, I don't know, half a dozen wells which were sufficient to support him for the rest of his life. Unfortunately, none of them were the oil wells that we participated in. We basically put in a $100 and got back $160, that type of thing. So I wish that he had directed me to the correct wells, but he didn't. Nobody knows when you drill oil wells, how are you going to do.

John McAllister: So in your bio, it says that you're also in addition to being a professor at the Kennedy School, that you're also involved with a real estate.

Richard Zeckhauser: Yeah, I've been involved with a variety of companies over the course of my lifetime. Most of them have been companies where one of my students or one of friends started it, and I was sort of a pretty critical advisor to that. The first one, I was partners with a man named Victor Niederhoffer whom if you've been an investor you may heard of. And Victor, in addition to being a brilliant investor, was the number one amateur squash player in the country for many years and the number one professional squash player in the world one year. And he did basically what quant investors did 20 years later. In the 1970s, we had 20 Radio Shack computers, which are probably about as good as three Apple iPhones, running in our office looking at patterns among commodities. And we would buy commodities on that basis. Basically, we were like a trivial version of Renaissance Capital.

I mean, this was 90% Victor's doing, but Victor was a wizard at all of this. But his problem was that he was very poor at money management, and he would always invest too much. So I eventually sold out of that company. And then there were a couple of small companies that I was a board member of, both of which were run by my friends, or actually by former students, one of which developed a video compression algorithm for the internet. So the reason that I could see you clearly at least 10 years ago was due to our technology. And then another of my students who's actually a Bridge player named Mark Thompson, started a company that did real estate investing. And it's been going now for 40 years. I joined it officially about 20 years ago. And the interesting thing is that your expected rate of return in the stock market, I presume many of your listeners are interested in investing, is about 8% a year and your expected return as a real estate investor, I mean, what developers generally earn is 18 or 20% a year.

Now, these developers have special skills, which I certainly don't have. But what our company does is we say to developers, "Look, we will put some money with you, and you will take something off the top." Well, we actually earn net 18% a year. Our developers earn 23% a year, but that's just the normal rate of return if you have those skills. And to some extent, that's what I've done. I call that sidecar investing. 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. We provide financing, but we also talk to them about how to finance things. We talk with them as to what we should invest in. And that's a little bit the way you should play Bridge. And if you can get to play with Geir Helgemo, you have the big powerful motorcycle and you're in sidecar and you don't have to do much.

You follow suit and occasionally make a cuebid and get him to a slam, that type of notion. I think that the skills of decision theory, Bridge and investing all sort of flow together and reinforce each other. So many things that I write about, I learned about because I played Bridge. How to think about small probabilities, how to gauge probabilities effectively? And I think if you read the Bridge world or the ACBL Bulletin, there'll be lots of articles about how a guy played a hand better than somebody else, and he had a 2% edge or 3% edge. Virtually never do they sort of say, "What do you think is the likelihood that with nothing else that your partner has, he's just preempted at the three level non-vul versus non-vul third seat." What's the likelihood that he has a seven-card suit as opposed to a six-card suit, which is quite critical, and they should ask the question.

And then you get better at saying, "Oh, that's really more closer to 30% than 80%," even though your principal is to play with seven cards 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. So I just want people to start to think in terms of subjective probabilities. And I've done lots of studies as to how good people are at coming up with subjective probabilities, including what's the likelihood that the next car that goes by is green? And you start to discover that what you say is 30% really is only 10%, so you learn to calibrate yourself better.

So some of it is a general skill and some of it is applied to Bridge situations. I think it carries over from one to the next. So if I'm good at guessing your likelihood of having a six-card suit, I'm good at deciding what's the likelihood that you led from fifth best from a five-card suit against No Trump to fool the Declarer, and the Declarer was Michael Rosenberg. Would you do this against an expert player? 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.

John McAllister: So how do you evaluate your own Bridge game then?

Richard Zeckhauser: Well, first they said, I don't try to evaluate it so much because 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 how are our scores, how are we doing? I think that when I go to a pair game at the Nationals, I'm playing fine if I come in the top 15. I'm playing okay if I come in the top 30. I'm playing poorly if I don't get to the final cut, and I realized that there's a lot of luck, so you might even play well and not make it to the final round.

John McAllister: What about though you've got a decision in Bridge, you've got a decision like you're going to bid or you're going to pass. How do you evaluate those situations in hindsight?

Richard Zeckhauser: Well, I think I try to learn a little bit. I mean, I can tell you something that I've just changed with my partners, which is though I don't think so much with Michael Rosenberg, which is that we're going to routinely open up five-card weak two bids in first and third seat non-vulnerable. Well, I've done that three times.

So I'm going to decide whether should you really open up the King-ten five times or should you wait until you have the King-Queen-ten five times? And I'll look a little bit from experience and I'll look a little bit... I'm playing with John and John says, "Look, I've been playing this for years. Let me tell you it's a great system and you should do it with any five-card suit." 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 three of the top five honors."

So you learn a little bit from other people, you learn a little bit from reading. I've actually gotten more from reading than most Bridge players because I haven't been able to play very much. So I find reading The Bridge World useful, I find reading the book about Boye Brogeland useful. So, I basically think that's what I do. And I think that you have a right to ask people that you play with a few questions. So I will write to Michael Rosenberg once every month and a half about some Bridge situation, 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. And I would do the same thing with Boye, and I have no idea I've never written to Geir about it. I don't know whether he would answer or not. Maybe he would answer very quickly.

John McAllister: Yeah. I mean, I had a bidding problem recently and I asked Joe Grue about it, and I did feel like I was on borrowed time. I wanted to ask him, but I also realized that that's what he does for a living and his opinion is quite valuable to me. But I felt like I needed to be respectful of... That's how he earns a living.

Richard Zeckhauser: So I'll tell you one story that Joe Grue will appreciate. So I play in a game in Florida that's run by Michael Becker, and there are about, I don't know, 16 people who play in that game, and most of them have won national championships. It's very good game. I mean, David Berkowitz plays and Michael Becker plays and Kerri Sanborn plays. And one day David said, "Are you going to be playing this week?" And I said, "No." He said, "Well, you should play because we have a guest and he'll be the best player in our game," meaning that he'll be better than David Berkowitz. He said, "Who do you think it is?" That could be a lot of people. I think that David's fairly modest, and it was Joe Grue. So he was saying that Joe Grue would be the best player in the game.

But I want to tell you something about bidding problems and maybe part of the reason that Malcolm wanted me on his team. After Malcolm would play a match, I probably played on his team one time for each five times he played in a serious event. He would call me up and sort of say, "Let me tell you, we came in second. We came in third tied third, fourth. Let me tell you about this hand that Paul got wrong, this hand that Eddie Wold got wrong, this hand that John Swanson got wrong, okay? And then he would ask me what I would've bid or what I've made, and I gave my best answer.

And this is a behavioral decision point. My answers were generally better than the answers that Paul or John or Eddie would provide. The reason being is that there was selection bias. Malcolm didn't ask me about the brilliant bids that Paul made. He only asked me about the bids that Paul made that worked out poorly. 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. 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. But anyhow, he was very nice. He was happy to have me on his team as long as we could play. So, that was great. And I think he wanted to win more world championships.

John McAllister: What was the world championship that he won?

Richard Zeckhauser: I don't know the year, but he won it, I think in Buenos Aires. It was definitely in South America.

John McAllister: Okay. Do you know if it was a Bermuda Bowl or...

Richard Zeckhauser: It was a Bermuda bowl, yeah. So it was a good thing to win.

John McAllister: Was this recently that David asked you about Joe Grue?

Richard Zeckhauser: Yeah, I would say it was a year and a half ago.

John McAllister: Oh, okay.

Richard Zeckhauser: And Joe Grue was just coming down to Florida to, I don't know, get some sun.

John McAllister: Well, Joe played in that game, I think this a week or two ago. We were supposed to play a regional in Fort Myers last week, but obviously the Hurricane Milton undid that.

Richard Zeckhauser: Right. No, no. I presume he's down in Florida. He went to play in the game. What did he say about the game?

John McAllister: Well, he was more talking about playing golf with those guys.

Richard Zeckhauser: That's the thing. These guys are all good Bridge players, but they're really more interested in playing golf than playing Bridge. I've asked David to go to a show or something like that, he said, "No, no, I can't do that. It'll interfere with my golf game." And they talk about it a lot. By the way, in terms of yelling at partners, we had some players in that game. Understand these people play every week. There's usually eight people, occasionally 12 people, that there were people who not only yelled at each other so much, so you'd hear it at the next table, but who refused to play with the other person. We would draw lots basically to see who was on a team. And so it was you, me, David Berkowitz and Michael Becker.

Well, David and Michael got along perfectly well, but the two of them would say, "We can't play together." And he'd sort of say, "Okay, you play with Michael, I'll play with David." And it was just sort of amazing to me how much this hurt their play. And there were a number of people there who would just start yelling as soon as anything went wrong. Fortunately, the mean age at that game is probably 78, and two of the worst offenders no longer play, sadly because they're no longer with us. So, it's a little bit like the ACBL and you sort of say, "Where is so-and-so, I haven't seen him in a long time." And he may have dropped out.

John McAllister: Have you played any rubber Bridge?

Richard Zeckhauser: I used to play in high school. Well, we would have IMP games at people's houses, but I used to play rubber Bridge with a very good Bridge player who was a Bridge professional named David Strasburg. You wouldn't have heard of him, but I would play for a penny a point and he would pay for a 2.9 cents a point or 4.9 cents. We'd play a set match. So he wanted me to play as his partner, and that was the only serious rubber Bridge I played, but I wasn't playing for a serious state. Yeah, I would play, I mean, rubber Bridge if there were a good game here, not for enough money that it really made a big difference to me. When you play in Michael Becker's game, if you've had a really bad day, you might lose $250. And I don't think rubber Bridge is played by the people who play in that game for much more than that. Those they'll play for poker for much higher stakes.

John McAllister: But you're today this conversation, are you in Boston?

Richard Zeckhauser: I'm in Boston, yes.

John McAllister: Okay. But you're listed in the ACBL as Hobe Sound.

Richard Zeckhauser: You have to can only list in one place. So I'm in Hobe Sound, and fortunately our house survived hurricanes Milton and Helene because in part because we're on the East Coast. By the way, I'm realistic about risks there. I tell my children that our house is for them, and I tell my grandchildren, this house is not for them. And it's not that I don't love them dearly, but I think that with climate change, our house which is directly on the coast may not survive another 40 or 50 years, particularly if storms intensify.

John McAllister: What did you think of the decision-making around COVID?

Richard Zeckhauser: Well, first place we have to decide the decision-making of the nation versus the decision-making of individuals. I'll give you the first example. When COVID came along, even though Trump's not a big fan of government, we did develop Operation Warp Speed where we developed vaccines quickly. But what we didn't do at that time was we didn't build our vaccine capacity. So as soon as we started building the vaccine, we should have started to build the vaccine capacity. So as you remember, when COVID shots first became available, they were very hard to get and they were allocated to first responders and to people who had a lot of conditions. And it was obvious that we were going to need the vaccine manufacturing capacity. So we should have said, "John, I'm going to get busy trying to find a vaccine. You get busy building vaccine capacity. And then if I'm successful, which may only be 50% likely, we'll be able to give people vaccine shots."

So that ended up leading to many, many deaths, many sicknesses. So that was sort of in my view, a significant problem. I'm an economist originally, worry about is opportunity costs. 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. There weren't articles in the New York Times of how much kids are losing from their schooling. Particularly, my grandchildren did fine. They went to a school which had all its lessons online, and they probably got 90% of what they would've gotten in person or maybe 85%. But the kids in the Boston public schools did very poorly.

And only two years later or three years did we recognize the vast loss of learning capability. And we didn't monitor that at all, basically at all. You could have taken tests at the time to see how the kids were doing. So that was the cost of developing the vaccines and administering were trivial. COVID is not around very much, at least in Boston, but I still think it's worthwhile to take a COVID vaccine. If you're someone who has a really terrible reaction, you already know that. But for the vast majority of people, they don't. Have you taken a COVID vaccine now, your booster?

John McAllister: I took one booster, I took a full vaccine, then one booster.

Richard Zeckhauser: Well, I would urge you to take another booster. I think it's a rational thing to do. It will take you an hour. I mean, at least our pharmacies, even if you go and you buy your atorvastatin, they'll sort of say, "Have you had your COVID booster?" Because they make, I don't know, $20 when they give you a COVID booster. So there's plenty of vaccine available. 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, and it provides significant benefit about slightly prior strains. Many people that I know including John McAllister say, "Well, I won't get another booster." How many times have you had COVID?

John McAllister: I mean, I know I had it one time. I've had some friends recently that have had it, that have had sort of a lingering kind of thing. Like friends that are my age that have had something that's been pretty annoying for them.

Richard Zeckhauser: Yeah. Well, how annoying would it be for you to get a booster shot in the next 24 hours?

John McAllister: Oh, very not annoying at all.

Richard Zeckhauser: Well, maybe-

John McAllister: There's a pharmacy near where I live that I'm sure I could go to and get a booster right away, more or less.

Richard Zeckhauser: Okay. Well, think about it. It's better than the best safety play you've ever taken.

John McAllister: What is my upside of it of taking it?

Richard Zeckhauser: You reduce your probability of getting COVID by probably 70%. And if you do get a case, it's probably milder than it would be.

John McAllister: Is there negatives to taking it?

Richard Zeckhauser: Which you already know. Yes, COVID boosters, some people have significant adverse reactions when they take the shot.

John McAllister: Which I have not had.

Richard Zeckhauser: You haven't had. So you don't have to worry about it. It's a little bit like you make an overcall, it's two-level vulnerable on Ace Queen-10 fifth and you've been doubled it. You've gotten doubled a few times.

You learn not to do that. You fail to make an overcall if somebody else fails to make an overcall on the Ace-King-Jack six times. And they also learn that they didn't get to their No Trump game. So, it's that sort of notion. This is failure to update your probabilities. And the other notion is that people treat the downside of having a sore arm and maybe even a headache for a day as being really significant relative to the dramatic upside of avoiding the thing. Now, one of the problems with vaccines is you never know whether it protected you. You got COVID once. You got a booster, you didn't get COVID. Well, maybe because you didn't come in contact with somebody who had COVID. And maybe it's because you did come in contact, would've gotten it, but didn't get it because of the vaccine. But nobody tells you that was a great thing to do.

John McAllister: Right.

Richard Zeckhauser: But I'm telling you that now.

John McAllister: Okay, I'm seriously considering it. I've come close in my mind to committing to do it, but I haven't quite committed to do it. I was close to committing to do it. Do you want to make one final push?

Richard Zeckhauser: Well, you mean on the COVID vaccine?

John McAllister: Yeah.

Richard Zeckhauser: No, I'll tell you how you might do it. Do you go out to dinner often?

John McAllister: Yeah.

Richard Zeckhauser: Okay. So my suggestion is you make a plan right now which is, "I won't go out for dinner until after I got my COVID shot." That's a commitment I'm going to make to myself. You are then more likely to get your shot, because as you're driving to your favorite restaurant you'll sort of say, "Geez, I made that commitment to myself. Richard Zeckhauser will be mad at me. I'll see him at a national. He'll ask me whether I carried it through. I like to get these stories that I can tell in my class." So, I think that makes it a little bit more likely that you'll get a COVID shot.

John McAllister: Are you coming to the upcoming Las Vegas NABC?

Richard Zeckhauser: I can't because I have to teach, and it just takes me too far and it's the end of the semester.

John McAllister: Oh, so you were at sabbatical last fall, that's how you were [inaudible 00:55:09].

Richard Zeckhauser: At sabbatical, yeah. We get a sabbatical once every seven years.

John McAllister: I see.

Richard Zeckhauser: So, the other thing that's nice for me is that the fall national is usually played in a distant locale for us. So that works out well for me because that would've been harder to get to anyhow. But I hope to see you in Memphis. Who are you going to play with in Las Vegas?

John McAllister: So I'm playing with Simon Hult.

Richard Zeckhauser: That's a good person to play with.

John McAllister: Yes. Somebody asked a top Swedish player who the best player in Sweden was in front of me and Simon Hult wasn't set as the top, but he was set as one of the top three.

Richard Zeckhauser: When I played with Marion, we played against him a few times. He's always played very well. But you can't tell from 20 hands whether Simon is terrific. But in Sweden they have a game where they get an infinite number of tables, and they play all the time. So it's no surprise that Sweden has a lot of very good Bridge players.

John McAllister: Can you give me an example of where you made a decision playing Bridge recently where you feel like in retrospect you really made a poor decision?

Richard Zeckhauser: I'm not good at remembering hands, but I think that I am too much of a pussycat when it comes to preempting. I would say that I'm at the 80th percentile, meaning towards more aggressive than people. But I think that I should move to the 90th percentile of good players because I just think that it works out well. It's very much of this notion of loss aversion. It's really embarrassing when you go for 800 against a vulnerable game. And your partner could say, "What the hell were you doing?" So that would be the situation. I think that I tend to also use splinter bids too rarely. I think they're quite valuable and I don't use them enough. I mean, I could give you many hands where I didn't play or defend optimally. I actually think that, which is rare for a serious player, I think my defense may be as good as my dummy play because I'm quite sensitive to playing with very good players and have sort of learned how they play.

And I feel very comfortable on defense. And some people get very nervous because obviously you don't know partner's hand or declarer's hand, but I say, I'm going to be willing to do this and I'm going to be willing to go wrong. So that's my general approach to matters. I also have a philosophy, which I think that Geir ascribes to this, but I think that even the best players suffer when they have such a complicated system. Not that they forget it, but that it takes up their brain capacity. That's one of the worst things about being loss averse. Otherwise, you and I just have a hand, we didn't get to slam. We should have gotten there. You could have cuebid, I could have cuebid, everythings... And I'm sitting at the table sort of saying, "Was that really John's fault? Was that really my fault?" I'm going to, I believe, do worse on the next hand. Not because I'm feeling bad, it's just because I'm trying to parallel process and I should be single processing. And I think that people aren't very good there. Do you know about the Gorilla film?

John McAllister: No.

Richard Zeckhauser: Okay. So look this up. The original film was made at Harvard and you should look up on the internet and you'll find it, and then you should provide it to your listeners. So there are a group of kids in a room and they're playing basketball, and some of the kids have black shirts and some of the kids have white shirts, and you are told to count the number. They're throwing the basketball around, count the number of passes and maybe even count the number of passes in the air and count the number of bounce passes. And then a person in a gorilla suit walks amidst the players. I mean, again, he walks right to group, pounds his chest and walks so on. And then you ask, I sort of say, "John, how many passes and how many bounce passes were there?" You say, "I think there were 11 passes and seven bounce passes." I said, "Did you see anything different, anything unusual?" You said, "Yeah. Well, the one guy passed it most of the time." And I sort of say, "Anything else?" And you don't see the gorilla.

John McAllister: Gorilla. Yeah.

Richard Zeckhauser: And there are lots of other videos that are like this, and that's the way I think it is when I'm worrying about the last hand and that's taking up some of my mind space and I can't focus on this hand. And generally, that doesn't matter because 90% of your bridge are pretty prescribed and 90% of your plays are pretty prescribed.

But when there's one that's not prescribed or when there's a thing where you should say, "Now's the time to stop and think," you're not going to do it. So I mean, that's pretty convincing that we're poor decision makers. Now unfortunately, anybody who listens to this, and looks at the gorilla video... I'll send it to you if I can find it ...

John McAllister: Okay.

Richard Zeckhauser: … Will now know what to look for. So they're going to have to show it to their boyfriend or the girlfriend or their spouse, their child. So, I think that that's part of also a problem of having an extremely complex system. There are some people for whom it makes no difference, whatsoever, and they can easily absorb the entire system. But I'm not one of those people.

John McAllister: What's the nature of this Munger quote that I opened with? How does-

Richard Zeckhauser: Well, I teach a course called Investment Decisions and Behavioral Finance. It's an executive program and we've run it for 30 years. And Charlie was my first dinner speaker, and I suspect we may have discussed Bridge a little bit because his partner, Warren Buffett was such a serious Bridge player or is plays so often, but I'm not exactly sure where he got that from. I hope he got it from Paul Soloway. I'm not sure if that's the case.

John McAllister: Is this the thing that just happened recently? Because I saw Annie was like you just did a two-day executive program, I think?

Richard Zeckhauser: No, we're doing it next week, and Annie's come up to talk to our group and then she's talked to our group online and she's going to talk to our group at lunch again online. By the way, don't think of her as just a professional poker player. She also very recently finished her PhD, which she started 25 years ago. Very unusual to finish a PhD at her age. And she's just a super smart and super entertaining woman. And she writes very entertaining and, in my view, instructive books. Her most recent book was “Quitting.” I thought that that book was interesting that people don't quit their activities often enough. And I like to talk to her. We often have conversations that will go on for quite a while when we discuss that. I think I'd suggested to her that she should try write a book called “Trying.”

This is the notion of getting option value. Let me tell you a story that has nothing to do with Bridge, but I can relate it to Bridge which is, let's assume that your favorite restaurant in Charlottesville is a Thai restaurant. And you go there once every two weeks. It's called Lotus Blossom, and then a new Thai restaurant opens up, which is called Bangkok Bistro. And so, he says, "Hey, Bangkok Bistro is really good." And you sort of say, "No, I like Lotus Blossom, I'll continue going there." Well, my view is you should try Bangkok Bistro at least once or twice because you might like it better. And even though in expectation it will be worse than Lotus Blossom maybe over... If it proves to be better, you can then go there another hundred times. So you're getting an option value.

The same thing is true about Bridge Systems. For many years playing with Charlie Coon, I played go-as-you-please. When you come back to Bridge after a hiatus, it's going to be hard to play two over one and forcing No Trump and things that you've never played before. I could have had Paul Soloway play my system. I immediately said, "There's option value here. If I like it and I'm able to play okay with it, I will switch my system." So I switch my system.

The idea that I should switch some minor treatment would not be a good idea because that would take mental capacity and would come up so rarely that it's not worth it. So I think a big switch in system might be worthwhile. So if I were going to play Bridge for another 10 years, I probably would try out a system where I open up a club with two-card suits and transfer at the one level. I think theoretically that's a superior system, but it would take me a little bit of a while to get comfortable with it. And I think its advantage is not as great as the advantage of two over one relative to go-as-you-please. And I may be wrong.

John McAllister: I had a question that I was going to ask you up until one sentence prior to you [inaudible 01:07:26].

Richard Zeckhauser: I can't remember the question you were going to ask me.

John McAllister: I know what it was. Have you ever invited Annie to play bridge with you?

Richard Zeckhauser: No. I'm not sure. Does she even play bridge? I'm not sure.

John McAllister: So she played bridge when she was younger, and I asked her this in the thing where your name came up, but she said she doesn't have anybody to play with.

Richard Zeckhauser: Yeah, no. I would be happy to play with Annie, but I have a difficult situation in Florida. Where I play in Florida, there's a club that has tennis, which is what we play in [inaudible 01:08:08] and stuff like that. They have a bridge game every Saturday and everybody in the bridge game, not everybody, many people sort of say, "Oh, would you play with me sometime? Would you play with me sometime?" And I've sort of made a rule of I'm not going to play with other people unless there's a very good excuse. There's one guy I play with. He plays fewer conventions and treatments than anybody else, but he is the best natural bridge player. And I don't try and change his game. But the only thing that we've done, which is incredibly valuable, is we now play almost all low-level doubles are for takeout.

So one thing I've got him to change, but we don't really know what 1 No Trump, pass three hearts means. I mean, it's undefined in our system, but it's the idea of what is the appropriate etiquette. When a student in my school says, "Oh, I hear you're a good bridge player, would you be willing to play with me sometime?" And I say, "I'm sorry, I have an absolute rule. I don't play with students who do this."

If someone a really terrific player came along. I would probably say, accept if you've already won a national championship. So I have played a few times with... I know you've played with Michael Xu, I've played with Michael who's very good. I tried to get Finn Kolesnik into Harvard saying that he was a terrific bridge player, but he wasn't accepted. But I would've certainly loved to have played with him. But there's a real notion also of being gracious to people, but not... I could play in Florida. I could play with a different player every week, never really enjoying it.

John McAllister: I understand.

Richard Zeckhauser: But Annie would be different.

John McAllister: She said she likes playing bridge, by the way, but she just doesn't... It's more that she doesn't have, it doesn't come up for her. She doesn't have the opportunity to play. You said, Malcolm was number one in his class at Yale?

Richard Zeckhauser: Right.

John McAllister: You graduated Summa Cum Laude from Harvard. Do you know what your class rank was at...

Richard Zeckhauser: They don't tell us our class rank. There are a number of people who are identified as having graduated first or third in their class at Harvard, and they're making it up. So I don't know where I was in my class, but I'm sure it was fine.

John McAllister: So, you suggested this article Investing in the Unknown and Unknowable as the most relevant of the articles you've written for me. And I just want to say that I was a pretty mediocre student at the University of Virginia, and I think that if I had had the opportunity to learn from you when I was in college, I really would've enjoyed it because I've got some highlight. I really endeavored to understand the material that you shared. And I just want to say, it's been a real pleasure to get to engage with you both in person, through email, but also through your scholarly works. And I'm very excited to see you at the Memphis NABC. Hopefully, we'll be playing against each other in the finals of the Platinum Pairs. I'm going to play with Joe Grue in the Platinum Pairs.

Richard Zeckhauser: Well, better than anybody in Michael Becker's game, which includes... And since I play in Michael Becker's game, that includes me, that includes David Berkowitz. No, Joe Grue is an incredible player and also a very personable person, which I take... By the way, I should stress all the people that I play with, I really enjoy or I wouldn't play with them. I mean, including the professionals. And each of them has a very different. Some of them are quite quirky personality, but in my theory, that Bridge should be fun. If you don't enjoy playing with someone, you shouldn't play with them. I mean, it's just taking up too much of your life. But anyhow, thank you so much for this interview. I learned something from being questioned, including some questions that I realized I didn't do so well on. Interviews are sort of like Bridge. You're more concerned with your weak answers than you are with your brilliant and incisive answers. So thank you, John.

John McAllister: Well, it's been a pleasure and I think I'm looking forward to the opportunity. Like there's some pressure here as an interviewer. I've got this erudite, real legend of Harvard University, 50 years at the Kennedy School. So I feel some pressure to really bring you out in the best way possible. And whether or not I've done that, I would agree that I am tending to focus on my mistakes a little bit. But I'm really excited to have dinner at Bangkok Bistro with you and talk about the hands.

Richard Zeckhauser: Good. Okay. Can I make a suggestion for you before you-

John McAllister: Please.

Richard Zeckhauser: ... put this on a... I get no royalties. There's a book on Amazon called Maxims for Thinking Analytically. It was edited by my friend Dan Levy, L-E-V-Y. And it's lessons from legendary Harvard Professor Richard Zeckhauser. And it will, I think provide a number of insights into the way I... The principles I try and teach my students. So I think you might employ one of those lessons when you present this. And I've even had the following experience. I don't know if you do this, but I've been interviewed not on Bridge, but just on life or on what we should do about current events. And I've given an answer, and then I've seen the interview and the interview has spliced in a very incisive question ahead of my answer.

So that's the type of thing that you might conceivably do, sort of say, "In your book of Maxims, you say such and such. Can you explain why this is important?" And then I'll give an answer that would go along with your question. I've already given an answer that will go along with your questions. So get this book. I think it costs $10.

John McAllister: All right. I will do it.

Richard Zeckhauser: And as I said, my friend Dan gets the royalties for this, not me, but it has quotes from all the people who've written articles with me or have been my students. So I think you'll find it interesting, okay?

John McAllister: Okay.

Richard Zeckhauser: Thank you, John. Terrific to talk with you.

Richard Zeckhauser: Good. Thanks. Okay. Bye-bye.

John McAllister: All right, thanks.