A Jackpot, as Luck Would Have It
Thursday, February 22, 2007
Hideki Inoue has never been all that lucky -- especially when it comes to money. But yesterday he stood in front of hundreds of his business school classmates at the University of Virginia, nicknamed "Darden's luckiest student" after getting through five rounds of random contests. He was facing two briefcases: Pick the wrong one, and he'd get nothing. Pick the right one, and he'd get $17,500.
He felt good -- he'd already beaten the odds to be there. Japanese samisen music was pumping through the sound system, students were cheering and two Darden School of Business professors dressed kind of like Mr. Peanut, in rented top hats, were standing at the ready.
He'd already imagined the plane tickets he would buy for spring break.
Not bad for a required course. With a gift from an anonymous donor, equivalent to almost a year's tuition for in-state students, professors Phil Pfeifer and Sam Bodily brought real stakes to their Decision Analysis class. Along the way, students learned to calculate odds, gauge their fear of risk and see how people try to explain away chance -- finding patterns in coin tosses and stock market picks, in lottery winners and blind dates.
The main goal was to get them thinking about the role of uncertainty in life, Bodily said: You can make good decisions, "but you don't get to choose outcomes. They happen."
And, Pfeifer said: "Part of this is to have fun. It's February."
On the first day of class, the professors asked students to consider a hypothetical situation: If they had a 50-50 chance of getting $17,500 or nothing, and someone offered them money for that chance, how much was a sure bet worth?
That was random, Garrett Ederle, a student from Boca Raton, Fla., thought.
But in the 10th class, the professors told them there was a real contest, with real cash.
This time, they had to write down the number they chose, and it was binding.
The expected value was $8,750, half of $17,500. They were aggressive, Pfeifer said, more so than he had expected; Inoue's $8,000 cutoff was about in the middle.
All 335 students were given a number, and five were chosen at random.