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vary, not available in all states. One

1:00

of the first big tasks of adulthood

1:02

is figuring out how you'll navigate the

1:04

economy. You have to get that first

1:06

job, figure out how to make your

1:08

paycheck cover the stuff you need, and

1:10

how to save for the stuff you

1:12

want down the road, like maybe a

1:15

house. One of the most crucial lessons

1:17

of adulthood is that the economy works

1:19

a lot like a game, a game

1:21

where the rules are not necessarily

1:23

fair. From K-E-R-A in Dallas, this is

1:25

think. I'm Chris Boyd. The game isn't fair

1:28

in part because the rules are often

1:30

set by the winners, which is to

1:32

say the people who are already doing

1:34

very well and invested in maintaining their

1:36

financial success. But you don't have to

1:38

start out rich to learn to play

1:40

well, and my guest says that learning

1:42

and applying strategies drawn from game theory

1:44

can pay off for us when we

1:46

make a big purchase, interview for a

1:48

job, or face a decision about seeking

1:50

a promotion versus looking for a better

1:52

job with a new employer. Darryl Fairweather

1:54

is chief economist at Redfin and author

1:56

of the book Hate the Game. Economic

1:58

cheat codes for life... and work.

2:01

Darryl, welcome to think. Thank you

2:03

so much for having me. One

2:05

thing you understood early as you

2:07

were preparing for a career as

2:09

an economist was that we don't

2:12

live in a perfect meritocracy where

2:14

hard work and talent determine the

2:16

limits of our success. How do

2:18

statistics around race and sex and

2:21

wealth demonstrate this? Well,

2:23

if you look at the stats, black

2:25

people or other racial minorities have less

2:27

wealth than their white counterparts, a law

2:30

that has to do with the history

2:32

of this country, segregation, and the laws

2:34

that were put in place that made

2:37

it harder for minorities to accumulate wealth.

2:39

And if you look at gender, you'll

2:41

see that women are on par with

2:44

men a lot of the times, then

2:46

if you dig deeper in most households

2:48

that are high earning, it is the

2:50

man who is earning the most money.

2:53

It is very rare that women are

2:55

the breadwinners in high-earning households. So I

2:57

think both of that just goes to

3:00

show that for some people, you know,

3:02

it's not an easy path or it's

3:04

not a clear path for them to

3:07

become as financially successful as their white

3:09

male counterparts. So depending on where we

3:11

are positioned, it can be a little

3:13

demoralizing to know the meritocracy doesn't work

3:16

the way it's supposed to, but that

3:18

information doesn't change the economy we have

3:20

to operate in, right? So one way

3:23

to deal with an unfair system is

3:25

to understand that it works like a

3:27

game? Yes, I think one of the

3:30

great things about the American economy is

3:32

that we do have choice. We can

3:34

choose which jobs to pursue, which careers

3:36

to pursue and... you know, largely which

3:39

games to play. So even if you

3:41

face a disadvantage in a certain avenue,

3:43

it doesn't mean that you aren't going

3:46

to find success. I think you just

3:48

have to be more strategic about where

3:50

you spend your time and what games

3:53

you play. I think a lot of

3:55

people have heard the term game theory,

3:57

but don't necessarily know exactly what it

3:59

means. Can you define it for us?

4:02

Yeah, I like to think a game

4:04

theory as the building blocks of economics.

4:06

It's the most micro of microeconomics. It

4:09

deals with interactions between two players or

4:11

sometimes three, but usually a limited number

4:13

of players and tries to determine how

4:16

interactions will play out. One, that interaction

4:18

is a negotiation. So you have two

4:20

people arguing over the price of something

4:23

or how much someone's going to get

4:25

paid. Both people have a number in

4:27

their mind and game theory helps us

4:29

understand how a negotiation will play out.

4:32

When you point out in the book

4:34

that most games are designed by and

4:36

for the winners, what does that mean?

4:39

Well, I think one of the reasons

4:42

that the economy is inherently unfair is

4:44

that the people who are in power

4:46

who can determine the rules of the

4:48

game, whether that's policy or within a

4:51

corporation, the way that corporation operates, how

4:53

they promote people, the people who are

4:55

making those decisions are people who have

4:57

already won. And I think it goes

5:00

against human instinct to get to a

5:02

place where you're successful and then turn

5:04

around and say that it was unfair.

5:06

People like to believe that if they

5:09

were successful, they got there because of

5:11

their own hard work. And I think

5:13

that makes it really difficult for people

5:15

in power to acknowledge that the rules

5:18

might have been benefiting them, that maybe

5:20

they did get some unfair treatment that

5:22

helped them get ahead faster than someone

5:24

else. So I think that alone makes

5:27

it challenging to expect the people in

5:29

power to be the ones who are

5:31

making things more fair. But to be

5:33

clear, approaching challenges as a game with

5:36

rules that may be unfair does not

5:38

mean we have to cheat in that

5:40

game to succeed, right? No, I don't

5:42

think you have to cheat. I think

5:45

you just have to understand the rules

5:47

well enough to navigate around the unfairness.

5:49

Because like I said before, one of

5:51

the great things about the economies that

5:54

we do have the ability to choose,

5:56

if there's a gatekeeper that's standing in

5:58

front of you, it doesn't mean that's

6:00

the end. You just need to go

6:03

find a different gate that doesn't have

6:05

someone standing in front of it or

6:07

has somebody welcoming. you welcome you in.

6:09

So I think, I encourage people to

6:12

be empowered and to feel like they

6:14

can win because I've played a lot

6:16

of games where I've come in at

6:18

a disadvantage. You know, all games have

6:21

some unfairness to it. Even a game

6:23

like chess, the white player goes first.

6:25

That's an advantage. But that doesn't stop

6:27

the person playing the black player or

6:30

the black player from winning. A lot

6:32

of the times, the black player does

6:34

win championships. So let's dive in here

6:36

to some practical examples. We can start

6:39

with negotiations which are essential in all

6:41

kinds of economic transactions, including salary talks,

6:43

as you mentioned. What is a Nash

6:45

equilibrium? So the Nash equilibrium means that

6:48

neither player has a reason to deviate.

6:50

So both players, given how the game

6:52

has played out, are going to commit

6:54

to the decision that they've made. Outcome

6:56

is not a Nash equilibrium, then one

6:59

or both players would be better off

7:01

choosing differently. Nash equilibrium is stable because

7:03

both players are better off with that

7:05

outcome. That's why that's the solution to

7:08

a lot of game theory problems is

7:10

finding the Nash equilibrium. For a successful

7:12

negotiation, really both partners need to have

7:14

something to gain potentially from negotiating. You

7:17

described this as their inside option beating

7:19

their outside option. What is the difference

7:21

between... inside and outside options. Yes, so

7:23

in a negotiation, the inside option represents

7:26

the outcome of the negotiation. If both

7:28

players come to terms and they agree

7:30

on, say, the price of a good

7:32

or the wage that the employee is

7:35

going to be paid, if it's an

7:37

employee in a boss, then that is

7:39

the inside option. The outside option is

7:41

everything that a player could get if

7:44

they walked away from the negotiation. For

7:46

a boss, that might mean hiring somebody

7:48

else to fill a position if the

7:50

employee quits. For the employee, that would

7:53

be the other jobs that they could

7:55

get outside of that role or having

7:57

no job at all. So in order

7:59

for a negotiation, to work, the outcome

8:02

of the negotiation needs to be better

8:04

than the outside option for both players.

8:06

That's all well and good in

8:08

the abstract, Darryl. Is there a good

8:11

way to know when to lean on

8:13

the inside option and when to go

8:15

outside? Well, the first thing

8:17

to understand is what the

8:19

other person's outside options are, because

8:21

that's the... information that will tell you

8:24

if you're going to be successful pushing

8:26

harder. If you are an entry-level worker

8:28

and you go and ask for a

8:30

raise, you need to first ask yourself

8:32

how replaceable are you? Like how many

8:34

people were applying for the job that

8:36

you got? How many people would take

8:38

your job? for the same pay, maybe even

8:40

lower pay, if they had the opportunity. That's

8:43

going to be the option that your employer

8:45

has is replacing you. So you need to

8:47

understand how replaceable you are before you go

8:49

and ask for more money. If you are

8:51

a higher up employee, you have more rare

8:53

skills and you know that it would be

8:55

really hard for you to be replaced, then

8:58

that should give you more confidence to go

9:00

in and ask for more money. Is there a good

9:02

way to test how much power

9:04

we have in negotiating without blowing

9:06

up whatever existing existing relationship we

9:08

have? That's a

9:10

good question. I mean, game

9:13

theory often has these kinds

9:15

of unrealistic assumptions that, you

9:17

know, the players aren't talking to each

9:19

other beforehand, that they aren't, you

9:21

know, trying to persuade, like

9:23

persuasion isn't really, usually a part

9:26

of these models, but I think

9:28

in the real world, you can.

9:30

gather information. You can, you know,

9:32

kind of float ideas and get

9:34

a sense of where your negotiating

9:36

partners heads at before you actually

9:39

go in. So I would definitely

9:41

advise doing that, getting as much

9:43

information as possible can only improve

9:46

your power. Like in the, in a

9:48

sense, figuring out how much power you

9:50

have actually makes you more powerful. So

9:52

yeah, I think that's a good

9:54

idea. Most games that we play

9:56

for entertainment have an element of luck.

9:58

How should we think game theory about

10:01

the relative importance of skill

10:03

versus luck in our chances

10:05

at succeeding at whatever it is

10:07

we want to do? Yeah, one thing I

10:09

talk about is how games aren't just

10:11

win or lose. Oftentimes you learn something

10:14

along the way that can help you

10:16

win in the future. But games that

10:18

are purely luck, like playing roulette or

10:20

day trading, for example, that involves a

10:23

lot of luck, aren't really getting you

10:25

more skills. I mean, maybe they are

10:27

on the periphery, but It's hard to

10:30

get better at something like that. So

10:32

in general, I would advise people to

10:34

play games that are more skill-based, less

10:37

luck-based. And I think because in

10:39

the long run, you'll get better and

10:41

better and your odds will keep

10:43

getting better, but those luck-based games,

10:45

your odds stay the same. What does it

10:47

mean to assess the marginal benefit of

10:50

any extra effort we might put in

10:52

that could tip the balance in our

10:54

favor? Buy us some luck, if you will. Yeah,

10:57

that's marginal benefit versus marginal cost. That's

10:59

a concept in economics. Basically, like, the

11:01

more you do something, the less fruitful

11:03

it is. You can kind of see

11:05

this in terms of, let's say, let's

11:07

say you're selling a product and you're

11:09

going door to door in your neighborhood.

11:12

The first time you go around knocking

11:14

on door selling your product, you're probably

11:16

going to make. a good number of

11:18

salesmen. But then the second time you

11:20

go on knock on doors, you're asking

11:22

people the same question over again, you're

11:25

probably going to make fewer sales, like

11:27

just staying in that same neighborhood, going

11:29

door to door, the more you do

11:31

it, the less fruitful it's going to

11:33

be, because you got the easy fruitful

11:35

it's going to be because you got

11:37

the easy fruit at the very

11:39

beginning and those high hanging fruit

11:42

are all that's left towards the

11:44

end. Boy, knowing when to quit is... It

11:46

sounds like such a simple thing to advise

11:48

people. It's not an easy thing to do,

11:50

is it? No, I think, especially because

11:52

there's so much emotion involved in

11:55

quitting, that failure for a lot

11:57

of people is the worst thing that

11:59

they can imagine. But yeah, knowing what to

12:01

quit is really what will save you time.

12:03

It's why some people, I think, I

12:05

think it's one of the biggest reasons

12:07

some people advance in their careers faster

12:09

than others is that they know when

12:11

to quit, they know when to go

12:13

pursue another opportunity, they know, they have

12:16

faith in themselves, that there are better

12:18

opportunities out there for them. I think.

12:20

In this Doridore salesman example, the Doridore

12:22

salesman who after the 10th go-around is

12:24

making zero sales is going to get

12:26

a lot more discouraged than the one

12:29

who just moves on to a different

12:31

neighborhood. So I think it's really critical

12:33

to know when to quit. You suggest in the

12:35

book we might use time limits to help

12:37

us decide when to move on if we're

12:39

not finding the success we want. Can you

12:41

give us an example of how this can

12:43

work? Yeah, I used this in my own

12:45

life when I was in graduate school. My

12:47

goal was to produce the kinds of research

12:50

that could get me a top academic

12:52

job. But after one attempt at it,

12:54

I came close, but it wasn't quite

12:56

good enough to meet that mark. And

12:58

at that point, I knew that I

13:00

couldn't keep trying the same thing over

13:03

and over again, expecting different results. Like maybe

13:05

the first time it was a fluke and

13:07

if I try again, I could get a

13:09

better research paper out of me. But then

13:11

I just decided like I put a time

13:13

limit on myself basically I gave myself one

13:15

year to do better and if I couldn't

13:18

then I would have to accept that you

13:20

know the first paper I put out was

13:22

my my best work and that's exactly what

13:24

happened I didn't come up with anything better

13:26

than the first research idea I had and

13:28

at that point I knew that it was

13:30

time for me to try something else. Another

13:33

example of this is in the housing market

13:35

a lot of time. times home sellers will

13:37

price too high, and they don't know when

13:39

to lower their price. But really, if you're

13:41

not getting any offers in the first two

13:43

weeks, you need to be lowering your price

13:46

because it's costing you money, the longer your

13:48

home sitting on the market, especially if

13:50

you have a mortgage on it. The

13:52

first time is ideal, but when you

13:54

do make a mistake, it's really important

13:56

to recognize it quickly because it can cost

13:58

you a lot of money. because whatever

14:01

time limit we give ourselves for

14:03

whatever question we have is

14:05

somewhat arbitrary, but if we

14:07

don't have that time limit,

14:09

we're not kind of forcing

14:11

ourselves to assess where we

14:13

are. Yes, it is going to be arbitrary.

14:15

I think that that's just part of life

14:17

is that you never have enough information to

14:20

know when is the exact right moment to

14:22

quit or when to start something new or

14:24

when to say start investing or anything. It's

14:26

just hard to know exactly when is the

14:29

right moment. I think making an educated guess

14:31

and sticking to it is one of the

14:33

best skills you can practice because commitment is

14:35

a hard skill and practicing it helps, but

14:38

also the more educated guesses you make and

14:40

the more you stick to them, the more

14:42

you can kind of become confident in your

14:45

ability to guess. If it goes right, you're

14:47

more confident. If it doesn't go quite right,

14:49

then you can readjust and try to guess

14:51

better the next time. But if you're not

14:53

committing, then you never get the outcome that

14:55

can tell you whether the guess was wrong

14:58

or right. Darryl, why might we sometimes,

15:00

we just talked about time limits, why

15:02

might we sometimes choose to hang around

15:04

in a job even if we are

15:06

not, say, getting promotions or raises at

15:08

the speed at which we think we ought

15:11

to? There are many reasons. There are

15:13

many psychological biases that can

15:15

have somebody making a bad economic

15:17

decision like that. One is status

15:19

quo bias, which is just a

15:21

preference for things to stay the

15:23

same. Once you hear about set

15:25

as COBIS, you'll probably start to

15:28

see it everywhere in your day-to-day

15:30

life. Another one is uncertainty

15:32

aversion. People prefer the certain

15:34

option to the uncertain one, even

15:36

when the odds aren't any different. There's

15:38

this classic example about how people prefer

15:41

to pull balls out of a jar

15:43

when they know that the odds are

15:45

50-50, versus when they don't know the

15:47

odds, they would rather avoid that. When

15:49

you don't know the odds, the odds are still

15:51

50-50. Like if you know there's a certain number

15:53

of black balls and red balls in an urn

15:55

and you pull it out, the odds are still

15:57

50-50, like mathematically, but people prefer to know the

15:59

odds. And I think this extrapolates out to

16:01

a lot of situations where at least

16:03

the job that you have, you know what

16:05

the bad things are. But if you

16:08

went out into the world and got a

16:10

new job, you know, things might be

16:12

better, but they're uncertain. And that feels just

16:14

much more scary. So I think both

16:16

of those things keep people in jobs. Also

16:18

if you have a high paying job

16:20

and you already have a mortgage, your life

16:22

is already set up in a specific

16:24

way, I think quitting can be very scary

16:26

because you're loss -over. So you don't want

16:28

to lose everything that you've already built,

16:31

even if the risk is not that high,

16:33

it still can be very scary to

16:35

try something new and have that risk come

16:37

up. Well, I mean, some of these

16:39

are straightforward calculations when we have all the

16:41

information we could possibly want, but often

16:43

we don't, right? If we get a job

16:45

offer, we can't possibly know everything about

16:47

what it will be like to do that

16:49

job. How do we learn to manage

16:51

our uncertainty so that we are willing to

16:54

take some calculated risks? Well, I think

16:56

the first thing is to be aware of

16:58

it. So if you're aware that almost

17:00

everyone has this bias towards the status quo

17:02

that they avoid uncertainty, then when you

17:04

are starting to feel like you may want

17:06

to try out a new job, you

17:08

should take that feeling very seriously because what

17:10

most people are going to do is

17:12

ignore it to their detriment. But if you

17:14

listen to it, you're already ahead of

17:16

the game. If you act on it, you're

17:19

already ahead of the game. So just

17:21

I think knowing where your bias is like

17:23

can help a lot. And then when

17:25

you're looking for a new job, what you

17:27

can do is you can ask the

17:29

people who currently work there what their experience

17:31

is like, but it's equally important to

17:33

find out what the people who quit thought

17:35

of the job. Luckily, there are lots

17:37

of websites where people love to gossip about

17:39

their corporate jobs nowadays. So that information

17:42

is pretty easily accessible, but make sure you

17:44

get both sides because they are going

17:46

to be very different. The kinds of people

17:48

who stay at a job versus quit

17:50

a job are going to be very different

17:52

kinds of people and have different tolerances

17:54

for different kinds of work structures. So you

17:56

want to hear both sides. to

18:00

play the game of algorithms,

18:02

the algorithms that screen our

18:04

applications and our resumes these

18:06

days before a human probably

18:09

ever lays eyes on them? Yes,

18:11

I think that, you know, if you

18:13

are going through the process of tailoring

18:15

a resume, you want to tailor it

18:17

to each. job that you're applying to.

18:19

That will increase your odds. And the

18:21

way you can do that is go

18:23

look at the job posting, look at

18:25

the words that they choose in the

18:27

job posting, and put those exact words

18:30

into your resume. If they want people

18:32

with a certain type of degree and

18:34

you have that degree, make sure it's

18:36

spelled the exact same way. Or if

18:38

there are tasks that they expect you

18:40

to do, make sure that you use

18:42

the same kinds of phrasing if you've

18:44

done similar tasks in your

18:46

previous roles. people reviewing those

18:48

resumes, that you are a great fit

18:51

for the job. So I am not someone

18:53

who would ever do this, but

18:55

I know there are people who

18:57

assume everybody is lying or gilding

19:00

their resumes a little bit, and

19:02

therefore if they don't do it,

19:04

they're at a disadvantage. What is

19:06

your perspective on this? I

19:10

think, I mean, honesty is a value

19:12

of mine, so I would never tell

19:14

somebody to lie, but I do think

19:16

that you can arrange your resume in

19:18

a very appealing way. I talk about

19:20

in the book how There are examples

19:22

of evolutionary game theory, that's a subset

19:24

of game theory, where even birds will

19:27

arrange their nests to be as appealing

19:29

as possible to mates and kind of

19:31

trick them with an optical illusion. So I

19:33

think one thing you can do, for

19:35

example, is highlighting the experience that

19:37

is most suited to the job

19:39

and making sure that's up front. You

19:41

know, if you have an internship at a

19:43

job and you want to look more important,

19:46

don't separate it out into its own section,

19:48

just put it with all your other. job

19:50

experience. Yeah, there's lots of things you can

19:52

do to kind of, I wouldn't, yeah, you

19:54

can just make it a little bit shinier. You

19:56

don't need to fabricate anything, but you

19:58

can definitely make it. Shineer. Besides

20:01

just listing all relevant work you've

20:03

done and education you've had, you

20:05

share in the book that you

20:07

think carefully about how your name

20:09

will appear on your resume or

20:11

a job application. Talk about that. Yeah,

20:14

so my name, Darryl Fairweather, is

20:16

gender neutral. Most people assume it's

20:18

a male name because it's more

20:21

male than female, but the two

20:23

famous Darryls are Darryl Strawberry, the

20:25

black baseball player, and Darryl Hannah,

20:28

the white woman actress. And that's

20:30

usually what people are expecting when

20:32

they see a Darryl, one of

20:34

those two things. Now my middle

20:36

name is Rose. So when I

20:38

want to signal that I am

20:40

a woman, I'll include Rose on

20:42

the resume. Darrell Strawberry, the black

20:45

baseball player. I am biracial black and

20:47

white. So I don't know, I'm always

20:49

aware of how people are perceiving me

20:51

and it's never really, and sometimes it's

20:53

way off from the way I think

20:55

they're perceiving me. So in the actual

20:57

economic research, it states, it shows that

20:59

resumes from white women with white.

21:01

sounding names are more likely to

21:03

be accepted than resumes with black sounding

21:06

names regardless of if it's male or

21:08

female. So knowing that I put rose

21:10

on my resume so people would think

21:12

of me like Darryl Hannah instead of

21:15

Darryl Strawberry because I wanted that extra

21:17

edge and I know lots of

21:19

people who have modified their names like

21:21

put initials instead of their first

21:23

name to conceal their gender or their

21:26

race and I think it's... I think

21:28

it's complicated to change yourself to

21:30

get further in society, but also

21:32

I try to give people the benefit

21:34

of the doubt that maybe they have

21:36

these unconscious biases or the resume sort

21:39

of does, but once I get in

21:41

the room and talk to people, that's

21:43

when I would be more sussing out

21:45

if this is going to be a

21:47

healthy environment for me or not. Then comes

21:49

the interview or like the pre-interview

21:51

phone screening. How can we employ

21:53

what's called the halo effect to

21:56

give us a boost? Yes, the

21:58

halo effect is a phenomenon.

22:00

behavioral economics where if you're if

22:02

you are appealing on one characteristic,

22:04

people will assume that you are

22:06

appealing on all characteristics. So a

22:09

professor who's really well dressed will

22:11

get better reviews from their students

22:13

than a professor who is not,

22:15

even when the delivery and the

22:17

material is exactly the same, because

22:19

people project, you know, good dresser

22:21

onto being good instructor, even when

22:23

that's not necessarily the case. So

22:26

you can take advantage of this

22:28

and just present yourself as being

22:30

competent and attractive. in dimensions that

22:32

have nothing to do with your

22:34

job and because of the halo

22:36

effect people will think you're better

22:38

at the job just because say

22:40

your hair is well done or

22:43

you're dressed well or you're really

22:45

congenial during the interview people will

22:47

naturally think that those qualities extend

22:49

to your to your work. And

22:51

I guess we can be aware

22:53

of this and act on it

22:55

even if we kind of morally

22:58

oppose the idea that people make

23:00

these leaps in their conclusion. Yeah,

23:02

I think that the leaps are

23:04

detrimental on a macro scale. So

23:06

when I'm actually like interviewing people,

23:08

I do the opposite. I'm like

23:10

extra conscious that these bias exists

23:12

and I try to separate, you

23:15

know, the way somebody is, you

23:17

know, dressing or speaking from the

23:19

evidence of how they actually would

23:21

perform on the job because, yeah,

23:23

as somebody who's screening, you want

23:25

to do, you want to. compensate

23:27

for those biases. Yeah, it's interesting.

23:29

I don't know how many employers

23:32

do this, especially, you know, in

23:34

this climate where, you know, DEI

23:36

has been discouraged at a lot

23:38

of companies, but it seems like

23:40

employers would be sensitive to the

23:42

possibility of losing out on a

23:44

great candidate because they glossed over

23:46

someone who didn't somehow look right

23:49

for a position. Yeah, I think

23:51

that... I think that there is

23:53

an opportunity to hire people who

23:55

otherwise would have been glossed over.

23:57

not just in terms of race

23:59

and gender, but also disability, like

24:01

just assuming that somebody who has

24:03

some physical disability can't do the

24:06

same job because of how they

24:08

look. I think it would be

24:10

great if we lived in a

24:12

world where people were more conscious

24:14

of how the anti-halo effect might

24:16

be disadvantaged people. What advice would

24:18

you give people who are looking

24:20

for a job maybe using the

24:23

online portals to apply? And you

24:25

know, you hear these stories of

24:27

people who are well qualified, but

24:29

have sent out sometimes dozens or

24:31

hundreds of applications and heard nothing.

24:33

Do they need to go back

24:35

and somehow redo the way they're

24:37

presenting themselves? It's definitely the

24:40

most challenging time to find a job

24:42

is when you are that entry-level worker

24:44

who doesn't have much to show on

24:46

your resume. So I think at that,

24:48

in that moment, like casting a big

24:50

net, applying to as many jobs as

24:52

possible, just taking what you can get

24:54

is the right strategy. So you can

24:56

at least start to build your resume.

24:58

When your resume is blank, you can't

25:00

be a picky eater, you have to

25:02

be an omnivore. It's when you have

25:04

something on your resume that you can

25:06

tailor that you can start to be

25:09

more targeted. We're going to talk about

25:11

home buying now, and it's helpful. You

25:13

are chief economist at Redfin. Can you

25:15

just talk about what that job entails,

25:17

why Redfin needs an economist? Sure, so

25:19

I work with our team of economists,

25:21

and we research the housing market. We

25:23

try to produce research that would be

25:25

useful to somebody buying, selling, or renting

25:27

a home, which is just about everybody.

25:29

And we also communicate that research to

25:31

reporters, to our executives, to our agents,

25:33

to help them understand the housing market

25:35

better. But yeah, our general mission is

25:37

to help people understand how the housing

25:39

market works. That involves, you know, day-to-day

25:41

goings-on in the housing market, like where

25:43

mortgage rates are headed or how the

25:46

trade. war is going to impact new

25:48

construction, but also historical things, like how

25:50

does redlining contribute to home values today

25:52

and why some homes are valued a

25:54

lot more than others. So it's a

25:56

broad research agenda. There is a great

25:58

deal of uncertainty now in a lot

26:00

of markets. How are you taking in

26:02

the information that seems to change hour

26:04

by hour and applying it? I've been

26:06

chief economist at Redfin for

26:09

over six years now and yeah,

26:11

going through the pandemic and

26:13

the interest rate hike after

26:15

that, it's just been, we've

26:18

been in uncharted economic territory

26:20

for like most of my

26:22

career as chief economist at

26:24

Redfin. But so the forecasting

26:26

is tough. a lot of the times like what

26:28

the forecast really does tell us is like

26:30

where we are exactly at this moment but

26:33

doesn't do a great job of telling us

26:35

where things are headed. So we're doing a

26:37

lot of scenario modeling like what happens

26:39

if you know inflation gets to this number

26:41

what would that to the housing market or

26:43

what happens if you know the trade war

26:46

escalates things like that. So when you can't

26:48

do perfect forecast you just have to rely

26:50

more on economic theory and envision

26:52

different scenarios happening. Do you have

26:55

any sense of what the housing market will

26:57

look like in the next year or two? I

26:59

think that home values are going to

27:01

be resilient to whatever happens in the

27:03

economy. Homeowners have a record amount of

27:06

equity in their homes. They have really

27:08

cheap mortgages from the pandemic. So

27:10

the homeowners would Like no matter how hard

27:12

they get hit, they keep holding on to

27:14

their homes. It's not like during the Great

27:17

Recession when there was a foreclosure crisis.

27:19

And nowadays things are different

27:21

too, like banks like to work with homeowners

27:23

a lot more instead of foreclosing on them.

27:25

They try to put them on payment plans.

27:28

So I think we're not going to see

27:30

many forced sales. or distressed to sales,

27:32

which means that home values will likely

27:35

remain quite high even if the economy

27:37

goes down. And if mortgage rates fall,

27:39

that could actually lead to more demand

27:41

and higher home prices and values.

27:43

I mean, certainly the first time anyone

27:46

buys a home will be like the

27:48

biggest financial transaction anyone has ever made.

27:50

There are so many tradeoffs and variables.

27:53

What are some ways to figure out

27:55

what belongs in like the needs column

27:57

and what can be filed under Wants?

28:00

really think hard about what you care

28:02

about, which is something I talk about

28:04

in the book a lot that if you want

28:06

in order to get what you want out

28:08

of life, the first thing is

28:10

to know what you want. So

28:12

it's easier said than done, but

28:14

I think what sometimes homeowners neglect

28:16

to think about are their neighborhoods.

28:18

So many people will prioritize having

28:20

a big home over having a

28:22

short commute. when oftentimes it's the

28:24

commute that is impacting their daily

28:26

enjoyment of their lives more than

28:28

having say a spare office. So

28:30

yeah, when deciding what your must

28:32

haves is your needs to haves

28:35

are, I would say think about

28:37

what your daily life is going to

28:39

be, how you're going to be spending

28:41

your time, and how you like

28:43

spending your time, because time is worth

28:46

money too. How much should we think about

28:48

how a place works for us? right

28:50

now, like the day we move in versus how

28:52

it might work down the road. Yeah, so this

28:54

is the bias and behavioral economics

28:56

called present bias where people weigh

28:59

the present day more than the

29:01

future and they do this even

29:03

in irrational ways. And one way

29:05

that that shows up is that people

29:07

are more willing to pay for a home

29:09

with a swimming pool in the summer. Now,

29:11

a home's value. Yeah, it should not fluctuate with

29:14

the seasons, but what's happening is that when

29:16

somebody goes to tour a home and it has

29:18

a swimming pool, you're thinking I'm going to be

29:20

in that swimming pool next month and it's going to

29:22

be great and I'm going to enjoy it so much.

29:24

Whereas when you tour the home in the winter, it

29:26

just looks like an eye store, this empty swimming pool

29:28

sitting there. People just fail to neglect to

29:30

realize that they're going to be owning that

29:32

home both in the winter and in the winter

29:35

and in the summer and in the summer. you

29:37

know, the value should be the average of the

29:39

two. Why do you suggest we try

29:41

to avoid falling in love with any

29:43

house too quickly? Because when you feel

29:45

like you own something, you value it

29:47

more. And you're also afraid of

29:49

losing it. You, you, uh, when

29:51

you once you start envisioning yourself

29:53

having Thanksgiving dinner, raising kids somewhere,

29:56

if you end up in a

29:58

bidding war, you could end up...

30:00

spending an irrational amount of money. And

30:02

we saw this happen a lot during

30:04

the pandemic when home values were going

30:06

up really quickly and there were dozens

30:08

of people bidding on the exact same

30:10

home that people started to act

30:12

irrationally. And in some markets like

30:14

Austin and Boise, home values did get

30:16

bubbly. They got overvalued and they came

30:19

down once interest rates went up. So.

30:21

Especially when you're in a high, highly competitive

30:23

market, you don't want to get

30:25

attached to anything because you don't

30:27

know if you're going to win

30:29

that home. Somebody else might bid

30:31

more. They might bid irrationally more

30:33

and you don't want to win

30:35

that kind of game. The winner

30:37

in that kind of a standoff

30:39

ends up losing when the market shifts.

30:41

And when it comes time to sell,

30:43

your advice is to price just a

30:46

little too low rather than too high.

30:48

Explain your logic there. underpriced. What happens

30:50

is that it gets multiple offers. People see

30:52

that this home is a deal, more buyers come

30:54

and tour the home, they compete, and the highest offer

30:56

wins. When you price too high, people see that, they

30:58

get turned off, they don't tour the home, they don't

31:00

put in an offer, even if it is under asking

31:02

price, because I think it's going to insult the seller,

31:05

and the home ends up sitting on the market longer.

31:07

When homes sit on the market, they get a bit

31:09

of a bit of a scarlet letter, they get, they

31:11

get a bit of a scarlet letter, they get a

31:13

bit of a scarlet, they get a scarlet, they get

31:15

a bit of a scarlet, they get a scarlet, a

31:17

scarlet, they get a scarlet, because why else wouldn't it

31:19

be selling? And then that home seller ends up usually

31:21

having to drop their price and accept an even

31:24

lower offer than what they could have

31:26

gotten if they just priced low to begin

31:28

with. So you don't want to ruin

31:30

your home's debut. And part of the

31:32

debut is advertising a price that's going

31:34

to get people to come look at

31:37

your home. So pricing a little low

31:39

is a better strategy. Okay, let's

31:41

talk about work. Darryl, can

31:43

game theory help us resolve

31:45

conflicts with coworkers? I don't, yes,

31:48

it can help, well, resolving I

31:50

think is a weird, it's a weird

31:52

word choice, but then you can

31:54

give us more confidence in knowing

31:56

how to proceed when we have

31:58

a difficult coworker. This is an

32:00

example in evolutionary game theory, I'm going

32:03

to go back to with the birds,

32:05

where if you have two birds that

32:07

are fighting, the option is often

32:09

to cooperate and to share resources. Say

32:12

they're fighting over food. You can either

32:14

share the food or you can fight

32:16

and the winner takes the food after,

32:19

you know, maybe suffering a wound on

32:21

both sides. Now, it's going to

32:23

be better to share in the long

32:26

run, but for the bird that's bullying,

32:28

they could potentially get more food if

32:30

they act in a bad way. So

32:33

understanding how that dynamic will play out,

32:35

understanding if you're up against somebody who's

32:37

going to be acting aggressively, bullying versus

32:40

somebody who's going to cooperate can

32:42

help you understand how to proceed, should

32:44

you proceed with aggression or with cooperation?

32:46

How do we calculate the costs and

32:49

benefits of backing down in a conflict

32:51

at work versus standing our ground? So

32:54

oftentimes at work we're having repeated

32:56

games, repeated interactions with our coworkers, which

32:58

means that it's not just a one-off,

33:00

how things play out one day

33:02

are going to impact the future. And

33:05

one thing to be aware of is

33:07

that if you let somebody bully you,

33:09

say you let them characterize you

33:11

in a way that isn't true or

33:14

take credit for a project that wasn't

33:16

theirs. you're sending the message to that

33:18

person and to everyone that there

33:20

aren't consequences when you are bullied, that

33:23

people can get away with it. And

33:25

that's going to lead to even

33:27

more of that kind of behavior because

33:29

the bullies will target the people that

33:32

they know aren't going to fight back.

33:34

So oftentimes, if you like standing

33:36

your ground in one scenario can help

33:38

avoid future scenarios, you kind of want

33:41

to send the signal that you're

33:43

not one to mess with, that you

33:45

are going to fight back. don't have

33:47

any real reason to be acting aggressively

33:50

towards you. We've already established that

33:52

the meritocracy doesn't necessarily mean like

33:54

the employee who works the hardest

33:56

will be the one who gets

33:58

the next promotion. How can we

34:00

use what's called backward induction to

34:02

set ourselves up for success? Yeah,

34:05

so backward induction and game theory

34:07

is this concept where when you're solving

34:09

a game, trying to figure out what the

34:11

best moves are, you start at the end.

34:13

You start with the outcome that you want.

34:16

So when you are up for a promotion,

34:18

the first thing to decide is like, what

34:20

is the second to last step towards you

34:23

getting that promotion? When I was working at

34:25

a tech company, the process for getting a

34:27

promotion was that my manager would put

34:29

me up. the promotion packet would go

34:31

to a board of directors like her bosses

34:33

and they would all decide amongst all

34:36

of them and their subordinates are

34:38

who ends up making the cut

34:40

for the promotion list, the final promotion

34:42

list. And then the promotion list would

34:44

go to the vice president who looks

34:47

at it and either gives it a

34:49

thumbs up or a thumbs down. So

34:51

when going for my promotion, I knew

34:53

I had my manager's endorsement, but I

34:55

knew that I didn't know if

34:57

I would make it through the

34:59

obstacle of getting on this list

35:01

of the directors. But I thought

35:03

about what was the directors, what

35:05

was their goal. They wanted to

35:07

look good to the vice president.

35:09

And the vice president thought that

35:11

their list was bad, that it

35:14

was missing somebody, then they would

35:16

definitely work to fix that. They would

35:18

want at least to satisfy the vice

35:20

president. So in that, after going through

35:22

that whole process of what the steps

35:25

are, I realize that the person I

35:27

really need to be impressing. is the

35:29

vice president, but I need to do

35:31

it in front of the directors. The

35:34

directors know that the vice president is

35:36

expecting my name on that list. I

35:38

can't like guarantee that the vice president's

35:40

gonna stick his neck out for me

35:43

enough to go criticize the directors. I

35:45

just want them afraid the director is

35:47

that the vice president will be looking

35:49

for my name. And so I started

35:52

interacting at work in a way where

35:54

I would be impressing the vice president

35:56

in front of everyone, You write in

35:58

the book about in your career

36:01

or maybe even as a student

36:03

reading certain books about success like

36:05

lean in and realizing that they

36:07

are often written like very much

36:09

about like one person's story like

36:11

lean in was all about you

36:13

know making sure you have self-confidence

36:15

that's not everybody's problem yeah I

36:17

didn't feel like it was my

36:19

problem when I read the book

36:21

so I was felt a little

36:23

disappointed I think for Cheryl Sandberg

36:25

confidence was a thing that was

36:27

holding her back or the thing

36:29

that she identified as being the

36:31

most critical in her career, but

36:33

it's just to me lacking advice.

36:35

The thing that gives me confidence

36:37

the most is knowing what's coming

36:39

and that's why I think understanding

36:41

economics is really what has instilled

36:43

confidence in me. Do you have

36:45

any sense of the game theory

36:48

involved in deciding to leave a

36:50

company and not jump to another

36:52

company but start one's own business?

36:55

Yeah, I mean, that's a risky thing

36:57

to do. So it definitely is a

36:59

risk versus reward calculation that can happen

37:02

there. But there's also beyond the financial

37:04

benefits of working for yourself, the ability

37:06

to be autonomous, to have, and if

37:08

that's something that you value, if you

37:10

value having autonomy, not having a boss,

37:13

then that makes it even more appealing.

37:15

So yeah, I think. Sometimes people are

37:17

starting their own businesses because they think

37:19

they have this great idea, but sometimes

37:21

it's just because they'd rather work for

37:24

themselves and work for a boss, and

37:26

that's a valid reason too. You call

37:28

marriage a negotiation game, which does not

37:30

mean like there isn't love there, but

37:33

it does mean two people are going

37:35

to encounter situations where their goals are

37:37

not perfectly aligned. What do we do

37:39

about those? Yeah, I feel like the

37:41

person I negotiate with the most is

37:44

my husband, which sounds it sounds bad,

37:46

but it is just like a daily

37:48

part of life. Like, you know, who's

37:50

going to take the kids to the

37:52

doctor's appointment or oftentimes it's about the

37:55

kids or who's going to, you know,

37:57

call the handyman to get something repaired.

37:59

It's always like a subtle or below

38:01

the surface negotiation that's happening. But I

38:03

think with the marriage, you don't want

38:06

to get into as a tip or

38:08

tap, where it's like, I did this,

38:10

so you have to do this. You

38:12

want to make sure there's enough surplus

38:14

in the relationship as economists call it,

38:17

where nobody is walking away just over

38:19

one disagreement. Within that relationship, you suggest

38:21

we try to align current goals and

38:23

future goals like. Consider what might change

38:25

down the line if we want children

38:28

and or when we have children. Yeah,

38:30

it's a really challenging thing to do,

38:32

but I mean, similar to buying a

38:34

home when you're getting married, you're making

38:37

a decision that could last for decades.

38:39

So you don't want to be present

38:41

biased. You don't want to just plan

38:43

based off of the honeymoon period. You

38:45

want to talk about what your lives

38:48

look like 10 years down the line.

38:50

And yeah, I talk about how marriage

38:52

marriage like you're entering into this cooperative

38:54

game where your goals. have to start

38:56

aligning or else you're going to always

38:59

be negotiating. So talking about what those

39:01

shared values are, those shared goals are

39:03

early on, can make the process of

39:05

marriage a lot smoother because you're not

39:07

constantly fighting over whose objectives are being

39:10

prioritized, you can align on the same

39:12

objectives. Should we start thinking about how

39:14

kids will affect our careers or how

39:16

our careers might affect our kids before

39:18

those kids even exist? Yes,

39:21

but I also don't want people to

39:23

freak out and try to plan too

39:25

much too far in advance. But if

39:27

you are early in your career and

39:30

you're planning on having kids say in

39:32

the next five, ten years, I think

39:34

it's never too early to start thinking

39:36

about what that would mean for you?

39:38

There are lots of different choices. Like,

39:40

are you going to continue working when

39:42

the kids are young? Or are you

39:44

going to be putting them in child

39:47

care? How much does that child care

39:49

cost? Does the city you live in

39:51

have affordable enough child care and affordable

39:53

enough housing to have both? Or would

39:55

you be better off maybe looking at

39:57

a different city where maybe you had

39:59

more support from family? all these things

40:01

are going to greatly change the economics

40:03

of rearing children for you. So I

40:06

think talking about that with your partner

40:08

is also really critical, especially when it

40:10

comes to things like where you're going

40:12

to live or whose parents are you

40:14

going to live near. Darryl, when we

40:16

are looking for a new job, some

40:18

employers will ask what sort of salary

40:20

range we expect. And this, I think,

40:22

creates anxiety for a lot of people

40:25

because on the one hand, we don't

40:27

want to price ourselves out of a

40:29

great job we might have enjoyed, but

40:31

we also don't want to offer ourselves

40:33

at a discount if we could have

40:35

earned more. So what should we say

40:37

about salary requirements if we don't just

40:39

panic and leave that form blank?

40:42

Yeah, usually the way that

40:44

recruiters phrase it is they ask

40:46

you how much you're currently making,

40:48

which you should not reveal. You

40:50

don't have to reveal it. So

40:52

what I would respond instead

40:54

is how much you expect to

40:57

make. That's what I always say.

40:59

And if you're worried about going

41:01

too high, just know that the recruiter

41:03

If they're interested in you for this

41:05

position, if you say a number that's

41:07

10% higher than their maximum, they're

41:10

still going to want to interview

41:12

you. They're going to want you to come

41:14

through because that's not a big enough difference

41:16

to matter. So I would try to get

41:18

ads close to the top of the range

41:20

of what this recruiter's budget is and try

41:22

to guess what the top of the range

41:24

is. And if you're off by 10% I think

41:26

it's still okay. You can do research

41:29

online to figure out what the range

41:31

is for pay. You can look on

41:33

websites like Glassdoor or others to see

41:35

what other people report their pay is

41:38

in those in that similar job, maybe

41:40

even at the exact same job. And

41:42

don't look at the middle, look at

41:44

the top, ask for the top. That's my

41:47

advice. Taboos around talking about income

41:49

have long existed within the workplace,

41:51

but really they exist in a

41:53

lot of other spaces as well,

41:55

right? Like most people don't talk

41:57

to their very best friends about

41:59

their salaries. Is that... something we

42:01

won't change? Is it something

42:03

we should change? Yeah, I think

42:05

it's always good to have

42:07

more information. I think what's... What

42:09

is nice nowadays is there are

42:11

these anonymous platforms where people can

42:14

share information without feeling like it's

42:16

going to impact their social relationships.

42:18

The reason people don't often

42:20

tell people how much money they make is

42:22

because they're worried it's going to change their

42:25

social relationships if people know that they earn

42:27

more or less than they do. So I

42:29

don't want to like say everybody should be

42:31

telling. every like all their friends and

42:33

family how much money they make if

42:35

they feel uncomfortable because I think that

42:37

those social reasons can be very real

42:39

but definitely go post it on websites

42:42

and share the information if it's in

42:44

an anonymous way that doesn't have any

42:46

social repercussions for you that's just like

42:48

a good thing you're doing for the

42:50

world when you put that out there. It

42:52

does open you up to judgment among people

42:54

you know if you earn whatever amount and

42:56

people think you're spending either too much or

42:58

too little for whatever reason. Right,

43:01

and I think that's nobody ever really

43:03

knows the full picture. Like you never

43:05

really know how much debt people are

43:07

in or what expenses they have ongoing.

43:09

Like are they caring for an older

43:11

parent? Are they sending money back home?

43:13

Or do they have some kind of

43:16

medical expense that you're not aware of?

43:18

I think it's like not really fair

43:20

at all to judge people for how

43:22

they're spending money. There's no. wrong or

43:24

right way to spend your money. So

43:26

I try not to judge anyone for

43:28

that, which I think should, if everyone

43:30

had that attitude, then it wouldn't matter

43:32

so much. Then you could just say

43:34

it because it wouldn't be so meaningful.

43:36

But I think because people, like it's hard

43:38

to say, the way you spend your money is

43:40

literally putting your money where your mouth

43:42

is. So you're signaling your values to

43:44

everybody, and not everybody has the same

43:47

values. Let's talk about the goals of saving

43:49

and investing. I mean, it's all well and

43:51

good for people who have all kinds of

43:53

spare money lying around at the end of

43:55

the month. What advice do you have for

43:57

people who are currently feel like they're currently...

44:00

just scraping by or in fact are just

44:02

scraping by? Well, if you're scraping by, like,

44:04

that is a tough spot to be in.

44:06

There's a lot of economic research that shows

44:08

that people who are living in scarcity just

44:10

have a harder time with everything. Even things

44:12

like solving, you know, day-to-day problems in their

44:14

lives, they're under this added financial stress, which

44:16

means that they just can't make decisions as

44:18

well. I think you should give yourself some

44:21

grace and understand that it's a really tough

44:23

spot to be in when you're struggling financially.

44:25

If I and then I would dive into

44:27

like what is the exact thing that you

44:29

are most worried about. Sometimes people feel like

44:31

renting, for example, is just throwing money away

44:33

and they'd really like to be a homeowner

44:35

and they're not saving enough to get to

44:37

that goal of home ownership. But if you're

44:39

living in a city where housing is really

44:42

expensive, but the job opportunities are really good,

44:44

then that's a very valid reason to be

44:46

renting because you're prioritizing getting your career in

44:48

a better place in the short term so

44:50

that you have enough money to pay for

44:52

your housing. in the long run. So I

44:54

think sometimes we can judge ourselves a lot

44:56

for not meeting the milestones of other people,

44:58

but if you are living in your values

45:00

and that's the only thing that matters, if

45:03

you're going towards your goals, they're your personal

45:05

goals, so you shouldn't be comparing yourself to

45:07

other people. Before I let you go, as

45:09

someone who is quite adept at playing the

45:11

game of capitalism, why did you call this

45:13

book Hate the game? economic system as yeah,

45:15

like kind of as a game and it's

45:17

it's not the best design game. There are

45:19

definitely a lot of flaws in it, which

45:22

is a good reason to hate it. But

45:24

the full expression is don't hate the player,

45:26

hate the game. And that's really what I

45:28

wanted to convey is that just because capitalism

45:30

has these issues that it isn't fair, it

45:32

doesn't implicate you to play. You are just

45:34

playing by the rules that are in front

45:36

of you. If anything, you shouldn't be directing

45:38

your anger at. the rules rules

45:40

themselves instead of punishing

45:43

yourself. the And the harder

45:45

you play, the more

45:47

lucky you are to

45:49

win, be and you

45:51

can be different than

45:53

the current winners. You

45:55

can the rules the rules

45:57

if you get to

45:59

a place where you

46:01

are, care of know, taking

46:04

care of yourself and

46:06

able to start the world

46:08

the world around you. game,

46:10

not hate the game,

46:12

not yourself. is chief economist at

46:14

is chief economist at the

46:16

book Hate author of the

46:18

book, Hate the Game,

46:20

Code for life, Codes Darryl, Love

46:23

and Work. for Daryl,

46:25

thanks so much for

46:27

the conversation. Thank

46:29

you for having me, this has

46:31

been great. has been great. Think by PRX, by

46:33

radio exchange. You can find us

46:35

on can Instagram, and anywhere you

46:37

like to get podcasts. you you can

46:39

find us at our website, And you

46:41

can find us at .org. Again, I'm Chris

46:43

Boyd. Thanks for listening. Have

46:45

a great day. great day. From

46:50

PRX.