Pull The Goalie

One of the podcasts that I regularly listen to is Malcom Gladwell‘s Revisionist History. In a recent episode (I’m a bit behind on my listening), Gladwell decided that since others (like Jordan Peterson) have been publishing their “Rules For Life”, Gladwell would give that a try as well.

But, Gladwell only really offered one rule that he’d recommend to others:

Pull The Goalie.

By that he was referring to the advice of Cliff Asness and Aaron Brown (both of AQR Capital Management) in their paper: Pulling the Goalie: Hockey and Investment Implications. In it, they suggest that the strategy of “pulling the goalie” (replacing the goalie with a sixth attacker to catch up near the end of a game; leaving one’s own goal unprotected) is an underutilized strategy that should be used more often, and earlier. The paper explains why pulling the goalie earlier will increase the chances of winning the game, even though it also adds volatility and increases the chances of losing by more points as well. It compares this situation with certain investment opportunities in which people should manage risks more intelligently than they do.

The paper acknowledges that that it could be rational for a hockey coach to avoid choosing the optimal strategy for winning the game, because he’s more interested in how much the fans will appreciate the strategy, and he could draw more criticism than praise from fans who notice the failures more than the successes and don’t appropriately appreciate the net difference. The game is about entertainment, after all, and the coach is paid to entertain the fans. Usually that means doing the most to win each game, but perhaps not always.

But, Gladwell draws a slightly different lesson. He sees it as a situation of being rational, “doing the math”, to figure out what to do in high-stakes situations without letting social pressure and conventions push you into suboptimal mistakes. He notes that both Asness and Brown are probably very low on the psychological trait of agreeableness; and indicates that while this might make them less popular at parties, it makes them better decision makers.

Gladwell uses another example in the podcast. He uses the plot of the movie No Good Deed to consider whether a parent faced with a psychotic home invader terrorizing her and her children would be wise to flee the house, leaving the psychotic alone with her children, to call for help rather than to stay with the children. Gladwell understands that most people’s intuition is to stay with the children at all costs (even though you would be unlikely to actually protect them, and that a psychopath who would harm them when alone with them knowing that the police are probably on the way would probably harm them eventually anyway). Gladwell says that if the chance of success is optimized by fleeing the house, that’s what you should do. The point is to maximize the chances of saving your children (and yourself), not to look better to others.

I’m 100% with Gladwell on this piece of advice.  One should try to make the best decision possible, especially when the stakes are high, regardless of what other people who don’t understand the calculation as well might think.

Do the math.

Pull the goalie.