Pascal’s Wager and Strategic Betting

It’s 1.30pm and you’re just stepping out of the office for lunch. You’re slightly annoyed at yourself for scheduling a 12pm meeting. In the last 20 minutes, you had to clear your throat every 5 minutes to mask the increasingly audible noises coming from your stomach.

You normally have lunch at your usual fish soup place that’s a 10-minute walk away. But today, you notice a new fish soup stall which has just opened right next to your office building, and it’s way cheaper than your usual place.

However, you have no idea if this new stall is any good. It isn’t very crowded, there are no reviews, and the quality of your lunch is REALLY important to you.

 What would you do?

Pascal’s Wager

This lunch conundrum reminds me of a classical philosophical problem known as Pascal’s Wager, argued by Blaise Pascal – a French philosopher who lived in the 17th century. According to Wikipedia, “Pascal argued that any rational person should live as though God exists and seek to believe in God.”

The gist of the argument goes like this:

If God exists and you believe in God, you’ll live your life as if God exists and be rewarded with eternal happiness when you get to heaven. If God exists and you don’t believe in God, then you’re pretty much screwed because that results in, well, eternal damnation.

If God doesn’t exists and you believe in God, you’ll probably go through life making a lot of moral sacrifices, only to die at the end and realise that it was all for nothing. If God doesn’t exist and you don’t believe in God, then presumably you’d live the kind of life where there would be no eternal consequences, have loads of fun, and then die.

If you don’t like reading, here is a fun video explaining it by a dude with an Aussie accent:

Because I studied Economics and these things get me excited, here is a table with the relative payoffs:

	God exists	God doesn’t exist
Believe in God	Eternal happiness (+∞)	Make some sacrifices, but find out it was all for nothing (-100)
Don’t believe in God	Eternal damnnation (-∞)	Have a lot of fun and then die (+100)

Let’s study the payoffs of our two choices:

• If you believe in God, you’ll either have infinite happiness (if God exists), or suffer a limited cost (if God doesn’t exist)
• If you don’t believe in God, you’ll either have an infinite cost (if God exists), or enjoy a limited payoff (if God doesn’t exist)

Therefore, from the perspective of pure, rational self-interest, the obvious choice is to believe in God.

2 Key Concepts We Can Learn From Pascal’s Wager

Now of course, Pascal’s Wager isn’t watertight. There are plenty of criticism of the argument, such as:

• It doesn’t prove the existence of God; it only argues why you should believe in God
• It focuses on Christian-centric concepts such as heaven and hell and excludes the payoffs/consequences according to other religions
• From a Christian point of view, if you’re only believing in God out of pure self-interest, then your heart’s not really “into it” and you probably won’t get into heaven anyway

These criticisms are fine – there are plenty of counter-arguments against them – but they tend to overcomplicate the key concepts. When we focus on the gist of the argument, there are 2 concepts we can take away:

• Forced bet: You either believe in God, or you don’t. There is no middle ground. Even someone who says “I’m not sure if God exists” is making a bet against the existence of God (since God either exists or He doesn’t)
• Asymmetric payoffs: Like many things in life, the payoffs and consequences of an action are not symmetrical. The optimal strategy is to choose the action where the cost is relatively small, but the payoff is disproportionately large. Poker players are extremely adept at this way of thinking.

Applying Pascal’s Wager To Everyday Life

 So back to our lunch conundrum. If we map out our choices and payoffs on the same table, here’s what we come up with:

	New place is awesome	New place sucks
Go for the new place	A cheap, delicious lunch option for the rest of your life! (+100)	You’ll have one crappy meal (-10)
Don’t go for the new place	You’ll miss out on cheap, delicious lunches forever (-100)	You won’t miss out on anything (0)

Since the potential cost is relatively low and the potential benefit disproportionately high, a strategic bet would be to go for the new lunch place and hope that it’s awesome.

However, this is counterintuitive to most people. Since most people crave certainty, they will be more likely to not go for the new place. We live our lives wanting to remain in the status quo (the bottom right quadrant), never realising that we might be incurring a crazily high cost for doing so (the bottom left quadrant).

The costs and payoffs for lunch might be relatively benign, but think about how the stakes can go higher in choices such as business, investing, or applying for a new job. Most of these contexts have both the forced bet and the asymmetric payoff concepts.

For example, by saying “I’ll learn investing when I have more time”, you’re essentially choosing NOT to invest now (forced bet). That leads to either the status quo or missing out on some potentially huge gains (asymmetric payoffs).

Everyday Decisions and THE Decision

So the next time you’re faced with a decision, think about Pascal’s Wager. Can you map out your choices and payoffs to help you make a decision? What choice are you implicitly making by refraining from choosing? Which course of action will limit your costs but give you a disproportionately higher payoff?

And finally – if this is a useful framework for most decisions in life, what about THE decision in life – namely: Should you believe in God, or not? Something to chew on for the rest of the week 😉