Know Deals and Deal

I’d really like to go on “Deal or No Deal”. Not because I want to be on TV, but because I think it’s the easiest money to be made. Thing is, it probably has one of the most practical financial lessons any show can teach. One is dealing with an uncertain financial outcome, and the other more important lesson is making a financial decision while experiencing intense emotions.

            I can’t say how I’d do in the face of the second issue. I do know one thing I would try to avoid: thinking an amount of money it “too little”. That’s what I think gets people. With $750,000 “still on the board”, $150,000 can feel small. Of course, it’s a huge amount of money for anyone who goes on the show! But the contestants compare it to what they could win.

            We all do this in some way, hold out for something we perceive as better. But this is where the first part comes into play. When we don’t know the outcome of something, we can assess the value of a decision by looking at the odds of success and the payout. Walking onto “Deal or No Deal”, you’re looking at an approximate $131,000 payday. That changes as suitcases open, and the banker doesn’t play by straight theory at every offer. But sooner or later, every contestant gets a chance to make the right statistical call.

            But what if you’re never on “Deal or No Deal”? Well, the lesson applies to everyday life as well. Any action we take has a chance of success or failure, and a payout. What could a sales letter earn? How much effort will it take? Same call with any number of activities. We tend to make the wrong call in the other direction. We assign a low probability to the success of an endeavor, and don’t undertake it. Again, how much might we be missing out on?

            There are no sure things in life. The best you can do is to put yourself in the best statistical position for success. On “Deal or No Deal”, that might mean taking a $350,000 grand, even if you end up having The Case. In real life, that might mean putting something, ANYTHING, out there, taking the risk that is low cost, which greatly increases your chances of SOME payout, and maybe even the Big One.