By Bryan Caplan
I made a wager this weekend while I was at a Liberty Fund conference in Chicago. Fellow participant Jeremy Rabkin of Cornell made quite a few predictions about the non-future of the EU that struck me as overconfident. When he assured me that the Euro could not last, I had to challenge him to a bet. After some intense haggling, we reached the following terms:
If France, Germany, and Italy remain on the Euro as of December 31, 2010, Rabkin owes me $20. Otherwise, I owe him $20.
Rabkin’s initial pronouncement was so unequivocal that I argued that he should give me odds. He seemed certain, and I wasn’t. But as usually happens when you challenge confident people to a bet, he demurred.
Some of my critics (such as) insist that financial incentives don’t make our beliefs more rational. But isn’t the refusal of the super-confident to give 10:1 odds exactly what my rational irrationality model predicts?
After we shook on the bet, Rabkin mused that he’d like to find another taker. My co-author Ilya Somin, who was also in attendance, lunged at the offer, so there’s now a total of $40 on the table.
I’m far from sure that Somin and I will win, but I do think the odds are in our favor. My main concern, in fact, is that we’ll forget the bet. Hopefully on January 1, 2011, I’ll still be blogging, and one of my valued readers will make sure Rabkin, Somin, and I have settled up.