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March 27, 2003

My wife's workplace runs an NCAA tournament pool. She wanted to participate but since she doesn't follow college basketball, she asked me to fill out a bracket. I did. I asked how much money we were going to win. She told me what the pot was but noted that the top scorer only received half the pot. Half was awarded to the worst entry.

Two generalizations about my wife's coworkers are relevant to what I did then. First, they are very nice people. They probably decided to award half the money to the worst entry because they were trying to compensate the loser for his shame and embarrassment Second, my wife's coworkers are not economists. They don't think like economists. Many of them, I'd bet, even dislike the way economists think.

So I, a practicing economist, filled out a second bracket, a bracket deliberately intended to lose. It was easy and fun. No sixteenth seed has ever won a game, so I picked the sixteenth seeds for the Final Four. (Vermont clobbers Arizona! IUPUI rolls!)

The result was that even though only two rounds have been played, that entry is locked into last. We have seven points, but the next lowest score is twenty-nine. And we can't score any more!

One of my wife's co-workers sought to console her for her extremely poor performance. She said it was done deliberately. Her co-worker said, "WHAT?" My wife explained that half the pot was a nice amount and that economists predict that people respond to incentives.

Her co-worker was shocked. My wife stands accused of "impropriety." She has been banned from the pool for one year and the pool will have different rules next year.

The moral of the story is that thinking like an economist may make you unpopular but can make you some money.

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John B. Chilton

This reminds me of a true Andy Barnett legend. As a senior graduate student at Virginia he was put in charge of implementing the allocation of a fixed number of library carrels to his fellow graduate students in the doctoral program in economics. The tradition had been to auction the carrels off to the highest bidders and Andy ran the auction as tradition had it. Proceeds went into a community fund earmarked - as I recall - for refreshments.

At any rate, one disgruntled student - whose name must have been forgetable, otherwise it would live in infamy - did not bid. Rather he went to the librarian and complained about the outcome. The librarian called Andy in and told him that what he had done was immoral and unethical, and - if I recall correctly - suggested selling carrels could be an honor violation.

She forced him to repeal the results of the auction and then forced the carrels to be allocated by random draw or seniority, I forget. If I recall correctly it was a bit complicated by the fact that the proceeds of the auction had already been consumed in the form of foamy brew.

Did the winners of the draw turn around and put their carrels up for sale? Did the librarian prohibit transfer of ownership? I don't know the answers to those questions.

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