I’ve spent the past hour in awe of the excellent marketing during the first four days of “March Madness” done by Quicken Loans with their “billion-dollar” promotion that has gotten a lot of attention since this past Thursday. For people who are interested in Charlie Munger’s mental models and love to study how psychology affects society’s perception of things, the Quicken Loans billion-dollar bracket gives us a lot of lessons.
First off, it plays to people’s basic notions to think in terms of “larger reward must be better” rather than calculating the expected payoff of something. Sure, the ultimate reward is $1 billion if your bracket is perfect, but you have to adjust it for the fact that the odds of getting a bracket right are 9.2 quintillion to 1 (actually, your odds are a little better than that because the quintillion figure assumes that every team has an equal probability of beating each other in any given round, whereas the reality is that you can get some mileage out of always assuming that the 1 seeds will beat the 16 seeds and the 2 seeds will beat the 15 seeds). Of course, all it takes is a Mercer win here, a North Dakota State win there, and a Dayton “Sweet Sixteen” appearance to screw up 99% of people who participate in the exercise (on a personal note, this was an exceptionally poor year for my bracket. It’s hard watching the SF Austin-UCLA game with friends, and upon getting asked who I picked to win, answering “VCU”).