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A Lot to Lose
Ted Frank and Ray Lehmann are taking the Stickk approach to weight loss to an extreme. For every pound less than 60 (!) that Ray fails to lose in the next 9 months he has agreed to pay Ted, $1000. Thus as much as $60,000 is on the line. Ted has made the same bet with Ray. The world has been put on notice.
Now this does raise an interesting prisoner's dilemma problem, with Ted and Ray as the prisoners. If the prisoners can agree to "cooperate" they could both eat and lose neither weight nor money. But with $1000 per pound at stake can Ray count on Ted not to cheat on his diet by dieting (and vice-versa)? But in this context is cooperation really cooperation or is it just joint self-sabotage? A true dilemma. But I have a solution.
I stand ready to be Leviathan! As a service to my friends, I propose that Ted and Ray pay me $1000 for every pound less than 60 that they fail to lose. Hell, out of the goodness of my heart, I will pay each of them $500 upfront for the honor of being Leviathan. Now that is an incentive!
Need I tell you that Ted and Ray are long-time loyal MR readers?
Posted by Alex Tabarrok on December 4, 2008 at 07:40 AM in Economics, Food and Drink, Sports | Permalink
Comments
I will be leviathan for $900 a pound.
Posted by: bastiat at Dec 4, 2008 7:51:35 AM
bastiat, you're going the wrong way: less money = less incentive. I'll be Leviathan for $10,000 per lb!
Posted by: Richard at Dec 4, 2008 8:00:30 AM
I have been on my own "contract diet" since July and have lost 70 pounds. I pay my teenage son $100 every week that I fail to lose at least 2 pounds. If I lose more than 3 pounds one week, I only need to lose 1 pound the next week.
I started at 330 on 7/12 and was down to 260 last week. I have only had to pay him one time.
The contract expires next July or when I reach 220 pounds (I'm 6' 3"). Then we will probably use a new contract for maintaining weight.
Posted by: Tom Kelly at Dec 4, 2008 8:51:38 AM
Does reading blogs increase your appetite and if so should we have a Pigovian tax on this activity ? Writers of blogs may be even more endangered to weight gain .
I have no data .
Posted by: Lowrie Glasgow at Dec 4, 2008 9:23:57 AM
Alex,
I would like to write the insurance policy on this bet.
Posted by: AIG at Dec 4, 2008 9:46:49 AM
I know you're just kidding, but the prisoner's dilemma doesn't apply to this unless exercising and losing weight is a negative gain in utility.
It does present an interesting question about how you evaluate the utility of something if people "want it but can't want it enough to do it absent external incentive" or "want to want it" or what have you. A lot of problems are like this: whether it's wasting time on the internet, not going to the gym, or eating food because it's right in front of us -- it's vitally important to anticipate and control the context in which you make decisions. That can be more important than knowing the "right" decision in advance.
Posted by: mk at Dec 4, 2008 10:05:40 AM
Does the contract mandate binding arbitration?
Posted by: Kevin Brancato at Dec 4, 2008 10:10:05 AM
I think those guys might lose a friendship over this. The way he initially described the bet, there's no cut-off at 60 pounds. I.e. he just said (if I heard it right) that he gets $1000 for every pound he loses, and same with the other guy. So if A loses 75 pounds and B loses 73 pounds, A could argue he's owed $2k.
Also, when he backed up and spun around, all it showed us was his shoulders. :)
Posted by: Bob Murphy at Dec 4, 2008 10:18:51 AM
While I'm fine with treating it as a Prisoners dilemma (defect / not defect with private benefits to unilaterally defecting), the repeated / continuous observation of actions predicts radically different outcomes than a single one-off game.
Folk theorem and all that.
Or in other words, since this will actually be an infinite series of observable actions, each will know if the other is defecting and can take appropriate counter measures. Thus there is no need for a third-party referree and the system can be self-enforcing.
Posted by: Jody at Dec 4, 2008 10:21:46 AM
No binding arbitration requirement, as yet, but many specific details of the "contract," as it were, are still under discussion.
And in fact, Alex is already helping to serve as Leviathan. Making the bet public, and notorious, serves as something of a check against our conspiring to bargain it away.
Posted by: R.J. Lehmann at Dec 4, 2008 10:28:58 AM
Bob: Total liabilities are capped at $60,000 (that would be if one of us loses 60 or more pounds and the other loses nothing, or actually gains weight.)
And yes, the space in which I recorded the first video diary wasn't big enough to get the full body shot I'd hoped for. I'll be updating every two to three weeks, so I'll have to get angle the next time.
Posted by: R.J. Lehmann at Dec 4, 2008 10:32:15 AM
If Wall Street's confidence hadn't been shaken over the past year, there'd be $1 trillion of fatboy slim derivatives piled up by now, poised one impulsive greaseburger away from a financial avalanche.
Come to that, if the recently collapsed overhang of complex instruments had been grounded in something as frivolous as Ted bellies and not something as supposedly safe as houses, maybe it'd have been rumbled a lot earlier.
Posted by: Drawbacks at Dec 4, 2008 11:25:42 AM
The difference is that "Leviathan" doesn't give its subjects a choice in whether or not it will enforce their agreements. It's compulsory. You give them a choice in the matter.
Posted by: Stephen Forde at Dec 4, 2008 12:22:03 PM
The difference is that "Leviathan" doesn't give its subjects a choice in whether or not it will enforce their agreements. It's compulsory. You give them a choice in the matter.
Posted by: Stephen Forde at Dec 4, 2008 12:22:55 PM
If I were Tom Kelly's son, I would be learning to bake.
Posted by: JP at Dec 4, 2008 1:06:09 PM
bastiat: up to a point (there's gotta be an equilibrium amount here) the incentives are for the losers to want to pay MORE money to add more force to the weight loss goal. I'll be leviathan for $10,000 a pound.
Posted by: Paul Gowder at Dec 4, 2008 1:30:44 PM
Doh, and then I saw Richard's comment. Preempted!
Posted by: Paul Gowder at Dec 4, 2008 1:38:36 PM
I call reinsurance on the contract, but only the low-risk tranche.!
Posted by: General Re at Dec 4, 2008 1:55:00 PM
The good news is that we save millions in government expenditures now that prisoners are now voluntarily entering prisons.
Posted by: not annonymous at Dec 4, 2008 2:02:38 PM
Everyone should read Dick McKenzie's WSJ op-ed on his experience with this weight loss technique. It appeared on January 4, 2008. He credits Tyler Cowen for the idea
Posted by: t. norman van cott at Dec 4, 2008 2:41:44 PM
They should agree to pay the money to some non-profit that they both hate.
Posted by: Scott at Dec 4, 2008 2:42:10 PM
JP:
My son can't bake, but he sure can taunt. He is constantly tempting me with his own delicious junk food that he can presently eat with abandon. He's over 6 ft and about 145 pounds at age 14.
Posted by: Tom Kelly at Dec 4, 2008 2:50:16 PM
so who is going to set up a market to trade "ted pays ray" and "ray pays ted" contracts?
Posted by: whitebread at Dec 4, 2008 2:55:53 PM
Wait, we need some clarification. Are they paying $1000 to the other for each pound the other person drops or are they paying $1000x for (60-x) that they lose themselves? Is it Scenario A or Scenario B? In practice, the net transfer is always going to be $1000y to the guy that loses more weight, where y is the differece in the loss.
Scenario A: Frank loses 43 pounds. Lehman loses 44 pounds. Lehman pays Frank $43k. Frank pays Lehman $44k. Net transfer of $1k to Lehman.
Scenario B: Frank loses 43 pounds. Lehman loses 44 pounds. Frank pays Lehman $17k (60-43). Lehman pays Frank $16k (60-44). Net transfer is still $1k to Lehman.
I only ask for this clarification because I think the better bet for motivating them is to give the money to a third party (or two third parties). For instance: Scenario A money goes to a charity of each one's choosing rather than to the the person who lost the weight. Or, Scenario B money goes to a charity that the person strongly dislikes. What schools did they each attend? I went to Georgia Tech, so if someone told me I had to give $1k to the UGA football program for every pound less than 60 that I lost, I'd be pretty motivated to lose 60 pounds.
Posted by: autolycus at Dec 4, 2008 3:07:19 PM
I'll pay $750 each for the right to be Leviathan at $1,000 per pound.
Free markets!
Posted by: Mercutio.Mont at Dec 4, 2008 3:49:27 PM
