376 Frequently Asked Questions In Quantitative Finance
that zero is ‘correct’ or they stop the inductive process
after a couple of iterations and submit something around
- It may be that the longer people have to think about
this, the lower the number they submit.
This is a nice problem because it does divide people
into the purely rational, game-theoretic types, who pick
zero, and never win, and the more relaxed types, who
just pick a number after a tiny bit of thought and do
stand a chance of winning.
Personal note from the author: TheFinancial Timesran
this as a competition for their readers a while back.
(The prize was a flight in Concorde, so that dates it
a bit. And the cost of entry was just the stamp on a
postcard.)
I organized a group of students to enter this competi-
tion, all submitting the number 99 as their answer (it
wasn’t clear from the rules whether 100 was included).
A number which could obviously never win. The pur-
pose of this was twofold, a) to get a mention in the
paper when the answer was revealed (we succeeded)
and b) to move the market (we succeeded in that
as well).
There were not that many entries (about 1,500 if I
remember rightly) and so we were able to move the
market up by one point. TheFTprinted the distribution
of entries, a nice exponentially decaying curve with a
noticeable ‘blip’ at one end! The winner submitted the
number 13.
I didn’t tell my students this, but I can now reveal that I
secretly submitted my own answer, with the purpose of
winning...my submission was 12. Doh!
