Smart players sometimes lose to dumb ones

Sometimes you can be too clever for your own good.

A well known game in game theory is one where the players are asked to choose a whole number between 0 and 100. The twist is that they have to try to guess the number that will be 2/3rds of the average of everyone’s guesses.

If a player thinks logically then he will realize that even if everyone chooses 100 then 2/3rds of the average will be 66.67 so there is no point choosing a number over 66. This player then eliminates all the numbers over 66 and realizes that 2/3rds of the average must now be less than 44 (44 is 2/3rds of 66). Now he eliminates all the numbers over 44 and then 2/3rds of that comes down to 29.

If he carries on with this logic then he will guess either 0 or 1.

What happens when this game is played in real life is that the average usually comes out somewhere around 20. What this tells us is that most people think about the problem a bit and go through the steps of eliminating numbers a couple of times but then they stop before they have gone through enough steps to get right down to one.

A smart player who thinks the game right the way through and chooses one will be ‘too clever for their own good’ and end up losing to the player that didn’t understand the problem as deeply.

Today’s takeaway: Don’t over-think a problem, you might end up being too clever for your own good

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