Why Not Raise the Stakes?
By Bryan Caplan
In the comments, rapscallion poses an interesting challenge:
The bets I’ve seen placed on this site are so small in value that they
don’t tell me much other than that none of the bloggers believe in
anything with much certainty. A couple hundred dollars is nothing to
upper-middle class academics; I’ll know you’re seriously convinced of
something when you start placing bets of $25k or more–enough money to
I disagree. If a couple hundred dollars were “nothing” to upper-middle class academics, getting them to bet would be easy. In practice, it’s like pulling teeth. See how hard it was to find anyone to bet me $100 on “the bailouts will lose money” or “the U.S. will have lower unemployment than Europe over the next ten years.” The main reason I don’t raise the stakes is because I want people to actually bet me.
But why are small sums enough to deter 95%+ of the people who disagree with me? I see two main reasons:
1. We aren’t just betting $100. We’re betting $100 plus reputation plus bragging rights. That’s why I prefer to bet the famous. The Simon-Ehrlich victory wouldn’t have been nearly as awesome if Simon bet a random Malthusian.
2. Many spouses, perhaps most, disapprove of betting. They think you’re irresponsible when you bet, and stupid when you lose. Imagine how badly they’d react if the stakes were $25k! Even the victor might find himself stuck in the doghouse.