The Economics of Getting What You Want | Judd Kessler | 715

And welcome, welcome, welcome. This is Peter Winick. I'm the founder and CEO at Thought Leadership Leverage, and you're joining us on the podcast, which is Leveraging Thought Leadership. Today, my guest is Judd Kessler. He's the inaugural Howard Marks Endowed Professor at the Wharton School at UPenn. He does a lot of interesting research combining laboratory and field work for market design, public economics, labor economics, behavioral economics, et cetera. He teaches undergrads and MBAs, and he's got a book out, which I'm almost finished, called Lucky by Design: The Hidden Economics You Need to Get More of What You Want. So welcome aboard, Jud. How are you? Doing well.

Thanks for having me. And thanks for almost being done with the book.

Well, some could have been done with it early. Like, I'm actually intent to finish it. I got up early this morning to try to finish it and didn't make it all the way through. But no, it's, it's, it's a great book. Thank you for writing it. So how does this happen? So I get, like, you've got a demanding schedule, right? You live in New York, you teach at Wharton, a lot of time on Amtrak or whatever, 3 kids, the whole deal. What drove you to write a book and what more importantly drove you to write this book?

Yeah, this book was kind of in me for a while. I've been at Wharton for 15 years and mostly when you are an academic, your main audience is other academics. So writing, yeah, writing articles that nobody, that nobody reads. Hopefully some people cite. But the insights that I was learning in my research felt like they had more practical uses. And so when I got tenure and the publish or perish kind of pressures were a little, were let up a little bit, I was like, all right, maybe it's time to communicate some of these ideas to folks who actually could make their lives better as a result of them. Learn how to see hidden markets in the world, learn how to navigate through their rules and then figure out the strategies to succeed. And stay there a minute.

Yeah. I want to point out that oftentimes when academics write non-academic things, right? Like things that people actually read, you pick it up and you go, oh geez, like he, you know, he's an academic. But what I would have to say is the book is real. It's readable, right? Like, cause I often feel when I read, which is not often, academic journals and such that, oh, here I go again, I'm the dumbest guy. Like, I don't— like, this is not written for consumption, it's written for flexing.

Yeah, uh, no, there's— the goal is to do as little flexing as possible. There's some embarrassing stories in, in the book about me, so I, you know, I don't know, uh, I don't know that, uh, it's as big a flex as one might hope. But the— this desire to make the book approachable so that anyone, even people who were not, you know, didn't study economics when they were in college or, or, you know, don't want to read an academic tome. I wanted it to be approachable. I wanted people to pick it up and immediately get that this is going to be helpful for you and it's not going to feel like being in class. And actually, that was— it, it gave me a little bit of writer's block at the beginning of the process because I want— I didn't know how to start the book in a way that would be accessible in the ways that I wanted that would communicate what's at the heart of the book, but without being, you know, pedantic. And I finally, like, I cracked it. It was midnight. I was laying in bed. I sprung up. I was like, I know how to open the book. I had just taught my youngest daughter who was 4 years old at the time, how to play rock paper scissors.

Right.

And that was an important lesson for her because that was one of the hidden market rules that we used in our house to decide you know, which TV show to watch, what to have for dinner. And she would watch her older siblings make what to her were totally incomprehensible hand gestures at each other until she understood how to play rock, paper, scissors and understood the rules. Once she understood it, then she could figure out what was going on. She could get why her older sister was happy and her older brother was sad at the end of a round, but then she played. For the first time against her, her sister. And she just threw scissors on every turn, right? And their sister's like, okay, I get this. I'm going to throw rock. Now my youngest liked scissors at the time. She was learning to cut. So you could see why she did that. But to me, that story was approachable, but it was also an allegory for what the book was about, that to succeed in these markets, you needed to understand their rules. You needed to know what was going on, understand that You know, this was a game that had rules that you could learn to play, but then also you needed strategy. It's not enough to just understand the rules. You have to know what it is.

Well, even before they understand the rules, there's a couple of examples in the story where you have to be aware that there's even a thing.

Oh yeah.

So is there a lot, a lottery for after-school programs or Shakespeare in the Park or whatever it is? So one is you gotta know like, okay. How do I get what I need to get? Okay. Oh, there's a set of rules. Okay. How do I obey the rules? Bend the rules, honor the rules, maximize the rules, whatever. And what, and think through, like you said, what are the best strategies to play, which are really applicable, right? So are there other, well, let me put it this way for you as a thought leader, right? So you've got academia is sort of the profession. Yeah.

Now we've got author.

In as part of that thought leadership portfolio. Is there other things that you're doing in terms of speaking, advisory, consulting?

Yeah, so I'm start— the book was like my coming out party. That's how I think of it, as, uh, so I am starting to kind of tiptoe out and do more of those other kind of in-the-world types of action that are, you know, supported by the thought leadership or consistent with that. So helping organizations. Uh, actually, one of these is in the book of my, like, kids' afterschool program where it's a first-come, first-served race to click to be the first one to sign up for the desirable afterschool classes. The parents hate it. I mean, they will send, you know, WhatsApp messages and text each other, oh, gauntlet day is happening, everybody, you know, has to cancel their plans. They're sitting there and, uh, you know, our schools' after-school platform. Like, it has never yet crashed when people are going on. But as after I wrote about this, I learned this was a problem that lots of schools have, and I started getting, you know, having conversations with, getting calls from folks who are trying to solve this problem in, you know, for their school and trying to help them kind of integrate. Okay, let's think about better ways to do this. Let's use lottery-based systems rather than first come, first serve. What would that look like? Some folks are trying to do it on their own. They're reinventing bad mechanisms. Uh, it's a very, it's, it's interesting to see in real time how people respond to this.

Uh, having talks with libraries, companies engaging with you to help figure out, hey, we have this thing, what's the best way to allocate this when we know demand's gonna in, you know, outstrip supply other than increase prices, which is classic economics.

Yeah. So the conversations I'm having are a real combination of nonprofits, government, and, you know, private sector firms that are looking for a better understanding how the ways that they allocate. Like, I've had conversations with consultancies around their staffing. So it's like, you know, you have this, this is a hidden market. We have lots of folks who want to work on specific projects, who want to work in specific industries, who want to work with specific people., and it's a complicated, sure, array of preferences. And are we doing the kind of right, do we have the right market rules for our organization, kind of the meeting the needs of the, um, clients and of the consultants? And are we kind of maximally getting what we can out of the consultants that we have? You know, and, and the important thing when you approach each of these markets is to say, all right, what is the actual objective? Like, you obviously want to deliver good work for your customers, for your clients, but like, do you want to satisfy the preferences of the consultants? Or do you know that like this consultant needs that kind of experience and it's a little more paternalistic?

That's right. You could, so you could add another variable and say, yes, we want to satisfy the client. That's non-negotiable. We want to develop the consultants on the dime of the client. We want to increase retention, right? And certain consultants have expressed that they're less likely to want to travel long distances or something like that. So you got to put all those in the mix and say, geez, how do we weigh those? How do we weigh all those variables? Right?

Exactly. And, and what I've noticed when I've had these conversations, and it's possible that the, the folks who are interested in talking are the ones who are seeing problems with their internal hidden markets. And so that's right why we're having the conversation, is they think that there's a problem. But lots of the conversations that I'm having reveal that folks are designing mechanisms kind of either through historical accident or somebody had an idea that seemed good at the time, but situation has changed. And so there's not as much reflection on what are the rules that we have in place to do this allocation.

And are the rules up to date? Are the rules up to date? Consulting 101 was get on a plane Sunday and come home Thursday. That's just the way it was. And then we had this COVID thing and it's like, actually, there's other ways to deliver, right? There's other ways to get value. There's other ways to less wear and tear on the consultant. So I want to ask you on the book side, because the book's been out a bit now, right? Is it a year? Less than a year?

No, less than a year. So, Almost 5 months.

So I was talking to a publisher friend recently and the person was telling me that one of their authors just submitted the manuscript and the author said to the publisher, awesome, I'm in the end zone. And the publisher said, actually, you're at the 50-yard line.

Right. Meaning that the work, there's different work.

Some would argue it's as hard or harder work on the post-publishing marketing piece. Tell me about sort of the, Pre-pub and post-pub, like the pre-write and then the, geez, I gotta get this out there and talk to pain in the necks like me all day to try to promote it.

The not, this is not a pain in the neck. This is quite fun. The, the writing bit was different than the kind of writing that I had done before. So I described, you know, academic writing being like a little bit of a chore or having gotten to that point and wanting to reach a broader audience. It is hard to write, you know, when you spend 15 years writing academic work or 20 years at this point, including graduate school writing academic work, it's hard to kind of switch into the, I want to write a book that's more approachable kind of mindset. That was the writer's block I described. Sure. But I had done that in college. I had written for the newspaper, you know, so I had some experience with, with writing in the voice that I wanted to write in. So it just took a while to get that voice back. But yeah, after the— so the writing the manuscript ended up being quite fun. I really enjoyed that process.

Okay. This—

so up to 50-yard line, you know, some stumbles at the beginning, but, but enjoy the process. It really is something that in particular, I think academics don't have a lot of experience with when we're doing the second bit, doing the book promotion, because it's, you know, it's one thing to have written something, to think that people will will like it if they get their hands on it. But we're competing with lots of books, lots of Substacks, lots of other forms of media. Yeah. And yeah, breaking through is tough. So I've enjoyed all the conversations I've had, but it's very different than walking into a classroom when people have decided to come to Wharton, they've decided to take your class, they're going to listen to you. You know, all you have to do is talk.

I would doubt at Wharton they've ever said, you're all right, Judd, we're having a slow, uh, A slow quarter, can you go out there and hustle up some clients, some students to—

Yeah, exactly. And also, you know, you're, you know, the students are not sure who to listen to. We're going to have all the classes at the same time. They might talk to, yeah, listen to Adam Grant talk or they might come to you. It's like, oh my God. It's like, it's not, yeah, it's a very different environment than we're used to. So it's, it's been nice and interesting and a challenge to kind of do something new. I think that's, something I've really appreciated about both the first 50 yards and, you know, wherever I am on the field right now on the back half of this process. It's been fun to be doing something new and challenging that I haven't done before. It's easy to get complacent if you're just doing the same thing every day.

Sure. So what are the things on the marketing side that you might not have even realized are things? Because what really, what you're competing for is not $25 or $30 for a book. You're really saying to someone, spend 5 or 6 or 7 hours with me and my ideas.

Yeah. Yeah. I don't know. I had a conversation with somebody at one of my book events. So it was my, it was a book party somebody threw for me. It was a bunch of people from college and their partners and, you know, random folks who had come and One of them was like a year and a half behind me in the process. Like he had just signed the contract for the book.

Got it.

And I was like, oh my God, I'm so glad I got you at this moment in time. Because if I knew now what I, you know, if I knew then what I knew now, I, you know, I'd do some things differently, like start to, you know, kind of figure out how you are going to enter the cultural conversation because the books that everybody reads are the books that kind of already have a little traction going into release. And so it's harder to generate that after the book is out, right? Like, you hope for word of mouth, you hope for a podcast, like, getting somebody to pick up the book. But, you know, you could start thinking now, 18 months before the book is released, like, you know, what are the things that you're gonna be— how are you gonna be getting the word out? And maybe that would help you kind of optimize how you spent your time while you were writing, you know, are you developing an audience? Are you like having contacts, you know, getting contacts with people in the media? Like, what is the, what is the plan? And it was like both kind of disappointing, but also like a relief that he was like, oh no, no, no, it's fine.

It's fine.

I'm just going to write a great book. And like, people will, you know, you know, it's like, all right, that's it. That was how, kind of how I felt like no one gave me the, the straight talk then. Or if they did, I didn't hear it. But, but yeah, so I think it's like the, the figuring out how to, I, I, I've been saying enter the cultural conversation, but like become something that everybody is paying attention to or focusing on. That's, that I think is like the magic that, yeah.

And I think that, you know, if I were you, I look at your book and, and say, I think there's two, two big things here. Number one. The individual, right, in the marketplace can now— you, you sort of given us filters and lenses to look through and say, oh, there's a thing here. Oh, there's rules here. Let me think about how best to play it to optimize my desired outcome, right? Like, I didn't even know about that. I just thought that like Ticketmaster, you go on Ticketmaster at 10:02, like whatever. And we've all been subject to these things, but we never really gave the thought of who designed these, how to play the game, whatever. If we're gonna play chess or checkers, we know the rules, we know the game, we sit down and say, let's play, right? That's number one. Number two, whether it's nonprofit, government agencies, organization, thinking about the pros and cons of how to design these things. Hey, we've always done it this way. We've always done it that way. Okay, well, is there a better way? Is there a different way? Is, you know, technology, how do you use technology? And, you know, all those sort of things.

Yeah. And, and I, I wrote the book, I think mostly for the first audience. I mean, so what you're, you know, 80% of the way through. So I have a little bit at the end about thinking about yourself as a market designer and how you, how, you know, we are also, yeah. So most, so let me, mostly we, I wrote the book for the folks as market participants trying to navigate through, figure out the rules, get what you want in all of the, the markets that you just named, but, but many more. Labor markets, dating markets, uh, school admission markets. And then there is in each chapter kind of how could market designers do it better? So you're in an organization or you're working at a nonprofit or you're, you know, you interact with some government agency and you see the system that they're using and you think this is terrible. It, it has to, there has to be a better way. There probably is a better way. And if you are involved, you can kind of start thinking carefully about it. You can read the book and maybe. On your own, figure out what the right tweaks or solutions are. You can contact folks like me or other people, sure, uh, who do this and make things better for the markets, uh, that you are involved with. And then in the book, towards the end, I also emphasize, like, you are a market designer for markets that you control. So a, a hidden market that needs these market rules is just a way of allocating— situation where you're allocating scarce resources and not doing it with a price that rises to, you know, decide who gets what. So that describes things like the market for your time and attention. There's a limited amount of it. A lot of people want it. Lots of things you could be doing with it. You're not, I mean, you might be if you're a consultant or someone who's, you know, charging for your time, but most of us are not saying like, oh, I'm gonna, you know, if you pay me enough, I'll respond to your email and otherwise I'm gonna ignore it. We are developing rules that are determining, okay, whose meetings do we take? Whose emails do we respond to? Who do we, you know, give the time of day and, and who do we ignore? And that is a hidden market. We have to develop the rules that we follow. We can decide how strictly you follow them.

Yeah.

But that way of thinking, the hope is that, you know, you will improve the markets that you are controlling as well as the markets you're, you're a part of or participate in.

Yeah. And that you have control. There is something to be controlled. Well, this has been great. I appreciate your time, Jud, and thank you for putting something out there that's interesting. Does anyone—

Thank you. Thank you. Uh, um, thank you for talking to me about it and, you know, helping to get the word out. As we, uh, as we said, that's, that's the ball game at this point.

You got it. Thank you. To learn more about Thought Leadership Leverage, please visit our website at thoughtleadershipleverage.com. To reach me directly, feel free to email me at peter@thoughtleadershipleverage.com. And please subscribe to Leveraging Thought Leadership on iTunes or your favorite podcast app to get your weekly episode automatically.