Monday, June 29, 2009

"The Backgammon Effect"

John Steele Gordon at Commentary Magazine discusses the "backgammon effect" as it applies to climate change arguments.

But why is the Nobel-Prize-winning economist so exercised about global warming as to be reduced to name calling instead of examining the data? Why are so many climate scientists and liberal politicians so certain of the data on global warming that they think the debate is over?

I think it is a case of the "backgammon effect." In backgammon, the players move their pieces according to the dictates of a pair of dice. A single bad throw of the dice can convert a near-certain winner into a near-certain loser. Being human, players sometimes misread the dice and misplay accordingly. They get a six-four, for instance, but play a six-three. The opponent, if he is paying attention, points out the error,  it's corrected, and the game goes on.

Interestingly, the player who misreads the dice and thus misplays almost always does so to his own advantage. Is he cheating? Not at all. He is simply misperceiving the real world because his self-interest leads him to do so. He wants a six-three and so he sees one in a six-four. It's as simple as that.

You could also call it the "miscounted change effect" -- when a clerk gives a customer the wrong amount of change by accident, it's usually an undercount. This also isn't conscious cheating -- it's merely that the penalties for coming up short at the end of the day are more severe than for coming up with excess cash in your cash drawer.  As a result, it makes sense to guard against handing back too much money more stringently than against handing back too little.  Besides, if you hand back too little, the customer is usually more than happy to help you get it right.  Fewer customers mention it when they get handed too much money.

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