The game show logic behind early retirement

Published March 30, 2016   Posted in Having some fun

Pretend that you are a contestant on a game show, and the host presents you with three doors. Behind one of the doors is a giant man-sized check for $1,000,000. Steaming piles of manure sit behind the other two, relentlessly festering a gawd-awful stench.

The host then instructs you to pick one of the doors – A, B or C. Obviously, you want to pick the door that hides the million bucks, not the ones with a steaming pile of shit. At this point, you have a 33.3% chance of selecting that door. Agree? Good, let’s move on.

Which door would you pick?

Which door would you pick?

Let’s say that you pick Door A.

But wait! The host then does you a giant favor. He opens one of the other doors that hides the manure (Door C), leaving you with a much better 50/50 chance that the door you selected (Door A) is the money door.

The host then gives you an option. If you’d like, you can change your pick. The option is entirely up to you – keep your original selection (Door A) or switch it over to Door B.

What do you do?

The game show logic behind early retirement

At this point in our scenario, it would seem like we have a 50/50 chance that Door A is the money door. After all, we are left with two available doors after the host eliminated one of our choices. He then gave us the option of switching our pick.

Do we switch?

Mathematically, the answer is yes. It is in our best interest to switch our pick over to Door B because Door A was probably the wrong choice.

But why? Originally, we only had a 33.3% chance of selecting the money door and 66.6% chance of getting manure. That means our original choice was probably stink-filled.

And so, mathematically, Door B will more times than not be the money door.

Make sense? When it comes to logic, our minds like to play tricks on us. Typically, we like easy. In this game show situation, it is easy to think of these two scenarios independently. In our first scenario, we had a 33.3% chance of getting money. In our second, it would seem like we had a better 50% chance. Door A is just as valid as Door B.

There in lies the mind trick. Mentally, we re-evaluated the proposition from a clean slate. Two doors. Pick one. But, using the context we built from the first three-door scenario, we can make better decisions about future scenarios.

How does this relate to early retirement?

Early retirement demands context. Successful early retirees learn from their mistakes, observe their surroundings and make informed decisions about their future that are shaped by the past. In other words, we don’t make decisions about our futures independently from our past.

Most people don’t. Or do we? Actually, many of us do.

One of my favorite phrases: “Keep doing the things that you’ve always done and keep getting the things that you’ve always gotten”.

In early retirement, the scenario is simple. We want to acquire enough wealth to support us and our families for the rest of our lives without the burden of full-time work. Okay, easy enough so far.

Most of us want to retire early, but very few of us actually do. A big reason why so many of us fail to achieve that goal is because we refuse to let our past habits (read: mistakes) influence our future decisions. We take money scenarios independently. We ignore context. We don’t use simple game show logic.

According to CNBC, the total credit card debt held by the American people at the end of 2015 was around $900 billion. That’s “billion”, with a “b”. Worse, EconomyWatch reports that half of the American people do not have a month’s worth of savings.

This simply cannot mesh well with a desire to quit the rat race and enjoy the rest of our lives in jobless bliss. Too many of us live paycheck to paycheck because we keep doing what we’ve always done, and as a result, we keep getting what we’ve always gotten. We ignore the mistakes of our past and keep chugging along in life headstrong into a stiff head wind, seemingly unwilling to step outside of our comfort zones.

We keep driving gas-guzzling SUVs and trucks. We keep paying big money for cable or satellite television. We keep upgrading cell phones whenever the opportunity arises. We keep buying closet-bound shit that does not truly make any of us happy.

But what if we use game show logic to run our lives? What if context begins to play a much bigger role in our decision-making process?

We start to employ logic. We understand that the road we’re ON isn’t necessarily the road that we want to be on (remember all those potholes we drove over?). Maybe Door A isn’t the best choice after all.

How to use game show logic to improve your decisions

Luckily, our brains are not designed with computer code. We aren’t just 1s and 0s, trues and falses, ons and offs. What separates the human species from other species (and machines) is our ability to process complex sets of data using a variety of mental processes that scientists are still studying – like our subliminal mind. We think organically, not computationally.

Machines process information in silos. They know very specific pieces of data and make repeatable decisions based only on that set of data. Humans aren’t like that, and neither is the world around us. We possess a shit-ton of information up in the ol’ noodle. This volume of information would be extremely difficult to model using computer data structures. But to us humans, it’s built-in.

Using game show logic is not tough. In fact, it’s rather natural. Here, I’ll show you in three steps:

  1. Understand that our lives are not made up of individual decisions
  2. Realize that the results we get largely depend on the choices we make
  3. Make active adjustments to future decisions based on results of past choices

We all make mistakes. I’ve made a ton of them in my life. Nobody is perfect, and there’s no use in aiming for perfection because, quite frankly, perfection does not exist. Early retirement isn’t about being “perfect” or anywhere close to it.

However, understand that the decisions we make are not nearly as individual as they may appear. Our lifestyles are organic and complex. Think of the decisions that we make as little Cheerios floating around in a bowl of milk. Each Cheerio is a decision, but these decisions all take place in the same bowl (aka: our lifestyle). One decision can and does affect another. They move. They sink. Sometimes, they crack. They bang into one another. They pile on top of one another.

And let’s be honest – we don’t eat these things individually, either. That would take forever. We take spoonfuls of Cheerios and enjoy the crunch. The substance. The sugar. Just like we do decisions. Decisions often come together, and together they factor into your enjoyment of the experience of making them.

Game show logic is about being mindful of our choices and using our past to help shape our future. If things are going right in your life, don’t change a damn thing. If things could be better, switch it up! Make a change. Try something different. The choice is entirely yours.

Don’t let that 50/50 door choice screw you out of achieving your financial goals. Sometimes, life eliminates a door that we shouldn’t choose. The only thing left for us to do is not lose sight of where we are, the road we are on and, ultimately, how we got there.

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Comments

11 responses to “The game show logic behind early retirement”

  1. Great analogy! I’ve been reflecting on how easily we justify stupid decisions to ourselves (and others). It sounds so good once you’ve made your mind and emotions to take that route, but you might see it quite the opposite way if you were being more logical. It’s crazy the mind-tricks we can play on ourselves!

    • Steve says:

      Mind tricks are definitely commonplace – for all of us. If we catch ourselves doing it, I think we are one step ahead of the game. 🙂

  2. You used our favorite game theory analogy! Gosh, I hope retirement doesn’t end up being a series of game theory decisions… though Mr. ONL would LOVE that. 😉 A great reminder, though, that decisions are complicated things, and one decision affects all those that come after it. That’s the biggest thing to us: making decisions begets more good decisions, and gives you tons of positive momentum. Whereas making the easy path-of-least-resistance, keeping up with the Joneses-type decisions begets more of that. Definitely a choose your own adventure situation. 🙂

    • Steve says:

      They are complicated things, and it’s funny how the decisions that we make very much affect many of our other decisions as well. Many things we do are all tied together. 🙂

  3. very good analogy…always entertaining. The numerical quantification of debt, and the average person’s reserves and retirement stash can be surprising–it’s scary to think that not that long ago I was part of that pool.

    Thanks again for another entertaining and insightful article!

  4. Stockbeard says:

    I had to google for the Monty Hall problem as I needed a more in-depth explanation on the door problem 🙂 Great read!

    The explanation that worked for me is that it’s easier to understand with a million doors.
    Pick one door, and the hosts open all but one of the 999’999 others. Consider what the chances are that you picked the right one from the start: one in a million. Making it much more obvious that the other one the host did not open is the winner.

    • Steve says:

      Yup, that one is even easier to understand – against the odds, you probably picked the wrong door, and when live opens up the wrong decisions, it makes it that much easier to choose the right one. We just gotta see it!

  5. This is fabulous. And I completely agree. I’m always jumping doors! They’re just not ready to open yet. 🙂

  6. Jack says:

    Game theory was always a bit of a brain pickler in business school, especially the Monty Hall problem. On one level it makes sense yet still runs my brain the wrong way. I had to play some modified 3 card Monty with a friend to prove it for myself before I’d fully believed it.

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