KF #5. Business Insight Archives - How to be Awesome at Your Job

Pete Mockaitis
Judd, welcome!

Judd Kessler
Thanks for having me.

Pete Mockaitis
Well, I’m so excited to talk about this stuff. This is a concept I don’t think people even know exists. Can you share with us what is a hidden market and why should professionals care about them?

Judd Kessler
Great question, my favorite question, because I’ve been thinking about hidden markets for a long time. So let me tell you what I think of as a visible market, the kind of markets we’re used to, and that’ll help us think about what a hidden market is. So visible markets allocate things by prices changing. And they’re easy to do business with, and we’re used to them. If you want something at a store, you go, you see what the price is, you decide whether to buy it. If it’s worth the price, you buy it, and if not, you don’t.

And this is how economists often think about markets. We think that prices move around to decide who gets what. But that’s not how all markets work. A lot of markets don’t have prices that decide who gets what. There’s a lot of people who want something and either the price is too low, so there’s more people who want it at that price than we have things to give. Or we don’t have a price at all. There’s lots of markets where we decide we don’t want to let kind of the richest buy access to the thing.

And in that second case, we have what I call a hidden market, where there’s something that decides who gets what, it’s just not prices. And so, you have to understand what it is that’s allocating the scarce resource.

Pete Mockaitis
Okay. That’s as fun, brain expanding. Can you give us an example of how this might apply in the professional world?

Judd Kessler
Yeah, it’s much easier with examples. I give you the theory bit first, but the examples are lots of products that you purchase have prices that are kind of too low from the standard economics, kind of sense of what prices are supposed to do.

So, if you want live event tickets or you want a restaurant reservation at a kind of popular place, in these cases, there are more people who want the thing than they have available to serve. And for a variety of reasons, the artists that are having that concert decide that they don’t want the price to just rise until only the rich can afford to go.

Pete Mockaitis
You know, I was going to ask, is that why? Because I’m thinking, if these Taylor Swift tickets or whatever sell like within seconds of them opening up, like, my immediate thought is, “Well, shouldn’t they just increase the price?” So, is the artists or others making the request to keep it at a lower rate?

Judd Kessler
Yeah, and people debate about why they do this. So, one argument is, well, think about the restaurant first. That, I think, is a little easier for us to think about. Like, the restaurant might like a line around the block or stories about how hard it is to get a table. They might think that kind of keeping prices low enough that they’re getting a lot of people who want to eat there, and that’s kind of creating its own buzz, is going to be helpful to be able to fill the restaurant for months and years.

I don’t think Taylor Swift needs to do that. Like, I don’t think she needs more buzz, but she might have different reasons to keep the price low because she has a bunch of fans, and if she were to set kind of market-clearing prices, prices where only one person wants to buy the ticket for each seat, then those prices would have to be very high and that would make it untenable for a lot of her fans to actually be able to afford tickets.

And as a billionaire, it might not be a good look to be charging $1,000 for a ticket. She’d much rather charge $99. But, of course, then it creates a frenzy for getting the tickets and a hidden market that pops up to decide who gets the tickets and who doesn’t.

Pete Mockaitis
It’s probably less fun, I’m imagining as well, as a performer if it’s like everyone in the seats is a multimillionaire. It’s like, “Okay, the vibe in here is not as enjoyable.”

Judd Kessler
No, and that is an absolute issue that, you know, kind of we think about in lots of different markets. So, it’s not just concerts, right? If you think about a baseball fan who sits in the cheap seats all season, and then the World Series comes along and prices are much higher, right, well, that fan might be the one who’s going to enjoy the seat the most and also kind of bring the most excitement to the stadium.

But if you price that fan out and you sell the ticket to somebody who’s never been to a game, but wants to say they’ve been to the World Series, that might not be a good use of that resource, and it might be less fun to kind of be in the stadium on that day. And the same thing is true in hidden market. I mean, there’s lots of hidden markets. I’ll give you a million examples, I’m sure, during the conversation.

But we also don’t, at Wharton where I teach, we don’t just raise tuition until only we can fill the class with just people willing to pay a very high price. That would not be a cohort of students that we would kind of think are the best fit for our school. We have different market rules, a hidden market that decides, “Okay, who is going to get admitted to our program this year?” And we don’t base it on price because we care about who actually is filling the seats in our classrooms, just like the artists might care about who’s filling the seats of the stadium.

Pete Mockaitis
Understood. Okay. So, there’s our concept. And your book, Lucky by Design: The Hidden Economics You Need to Get More of What You Want, you suggest that there are things that we can do to have more luck, to be the ones who are in the seats more often.

Judd Kessler
Yeah, so there’s lots of different examples in the book of these hidden markets. Basically, any time there are more people who want something than we have goods or services available to give to everybody. And so, what we need to do as market participants, as people who want those things, that scarce resources, we have to see that the hidden market is there. We have to be able to kind of see through the hidden nature of it and identify it.

Then we have to learn what the rules are. And that’s kind of a key thing, because there’s lots of different rules that determine who gets what in these markets. And the rules differ by which market you’re in. But then once we see the hidden market and understand the rules, then we can develop a strategy that actually lets us succeed.

Then we can figure out, “What is it that I have to do in this market to actually get what I want?” And that’s what I mean when I say getting lucky by design. It’s kind of you’re figuring out the hidden market, its rules, and how to play in it.

Pete Mockaitis
Okay. Well, so in the case of concert tickets, it seems, as far as I understand, maybe you got some inside scoop, Judd, a music fan, it seems the name of the game is, get on your computer, poised and ready to go, the second tickets become available.

Judd Kessler
This is what we call a first come, first serve race. So, we’re familiar with first come, first serve, but this is a race. It’s whoever clicks the fastest, gets the thing. And this is a very common type of market rule. So, it’s for the tickets for a lot of shows and sporting events. It also happens for restaurant reservations. If all the reservations for next month are released at the same point in time this month, you have to be there ready to click.

And, there, one key strategy, obviously, is, like, you have to know that this is a race and then you have to be ready to go on your highest speed internet, with your finger on your mouse.

Because a lot of times you’ll be playing in a hidden market, not realizing that the market is there, you’ll show up to make a reservation or to buy a ticket, only to find out that everything is taken. And it was taken weeks ago when the race started and you happen to not know that the race was on, you’ll miss it entirely.

Pete Mockaitis
Well, it’s funny, it sounds so simple, but you say, you have to see that there’s a hidden market there. You need to know the rules and then you need to develop a strategy to do so. That seems, in some ways, very, “But of course,” and yet I think that we overlook a lot of these things, like, “Hey, I want a lot of stuff. And it seems like I keep missing out.”

Judd Kessler
Yeah, “How did that person get that reservation? How did that person get the tickets? How were they able to do it? I showed up to Ticketmaster an hour after the tickets were released, and everything was gone.” It’s like, well, it turns out an hour is too long a period. You have to be there the minute it opens. And that might not be obvious to folks. But even if it is obvious, there’s other ways, other kind of strategies you should be thinking through when you’re running in these first come, first serve races.

Pete Mockaitis
Ooh, tell us, Judd. What do we do?

Judd Kessler
So, this is a strategy that comes up a lot in a lot of different hidden markets. And it kind of works against our instincts. And so, we have to think about when we should use it. But then we could potentially use it successfully. And I call it settling for silver. So, silver as in silver metal, as opposed to going for gold. So going for gold, being going after the thing that you want more than anything that kind of is, the most desirable option for you.

So, imagine, I tell the story in the book, I’m trying to get my wife a reservation at a very difficult to get reservation restaurant called The French Laundry in Napa Valley. They have only 60 seats. It has three Michelin stars. It’s also crazy expensive, but it was her 40th birthday. So, it was like, “All right, let’s give it a shot.”

They release all of the reservations for a given month on the first of the preceding month. So, at 10:00 a.m. you have to be there, ready to click. And in that situation, I might decide I want to go for gold. I might decide that I want to get the absolute best reservation that I can, the thing that I think my wife would want the most, maybe 7:30 p.m. on Saturday night.

The problem with that strategy is that a lot of people want to eat dinner at 7:30 p.m. on Saturday. It’s a very desirable time. And so, if I go for that, if I go for the thing that I really want, then I’m facing a lot of competition. There’s a lot of people that are trying to click at the same time as me.

It also turns out, this is very true in the live event space, also now more so in the restaurant space as well, there are also bots and, like, computerized programs competing against me to get those so that they can secure them and then sell them to me later at a higher price, if I’m unlucky.

But while I’m kind of going for gold, there are other people who are settling for silver, who are saying, “Look, I would love to eat at 7:30, but maybe that’s too aggressive a strategy. Why don’t I try for something less desirable? What if I try for a 5:00 p.m. reservation or 4:30 reservation? There’s going to be a lot fewer people racing for that. And if I go for that, I’m substantially, more likely to get it.”

And so, you, as a participant in this market, you have to think like, “All right, do I really want to go to the restaurant and I kind of care less about exactly when I go? I prefer 7:30 to 4:30, but it’s not that big a difference. Like, the key thing is getting to eat there.” If that’s the case, maybe settling for silver, even though it kind of feels tough because you’re settling, it’s right there in the name, maybe that’s a better strategy.

If you absolutely want to go at 7:30, you only want it if it’s the best, you know, the ideal thing for you, then you go for gold, but you kind of deal with the fact that you’re less likely to get what you want.

Pete Mockaitis
Yeah. You know what’s funny, this brings me back to, I’m thinking about high school, Model United Nations. And so, the most desirable countries to represent were those who had the permanent five seat veto power on the Security Council.

Judd Kessler
The power. The power in Model UN.

Pete Mockaitis
And we’re just, like, well, “Hey, if we want to be in the Security Council, everybody wants the permanent five seats, so let’s go for some nations that are on the Security Council, but don’t have one of the permanent five seats. In that way, we can get what we want with less competition. And is it such a big deal if we don’t have that veto vote? It’s fine.”

Judd Kessler
And this settle for silver strategy is one that students, you know, time of the year, you’re starting to think about applying to colleges, this is where this strategy might come into play.

So, college admission is another hidden market. And this time, there’s a participant on the other side of the market who’s deciding whether or not to admit you. So, I call these choose me markets, right? Unlike first come, first serve, where whoever clicks fastest gets it, and it’s kind of algorithmically decided who wins the race and who doesn’t.

With choose me markets, the market participant on the other side is trying to kind of suss out whether you’re going to be a good fit for them. It turns out, colleges in the US, they really like when they get high-quality candidates, but they also really like to have high yield. They want a large fraction of the folks who apply and are admitted to matriculate.

So, their concern with yield, their concern with getting people who they admit to matriculate, leads them to like applicants who apply early, and in particular early decision, where you’re basically committing to go if you are admitted. Now what’s the difficulty with early decision as an applicant? You can only apply to one school early decision, because if you get in, you’re committing to go.

And so, the colleges reward you with a higher chance of getting in if you apply early. But this is a case where you, as an applicant, have to decide, “Are you going to go for gold or are going to settle for silver?” Because if your dream school, your actual first choice is, like, really a reach and really unlikely to admit you, even if you apply early decision, then that might be a waste to go for gold. Like, you might use your application, your early application on your ideal place, but it might be that the competition is too stiff.

Go to your second or third choice school, maybe that’s a school that will admit you if you apply early, but might not admit you otherwise. Then, all of a sudden, you’re using your early application kind of effectively, it’s kind of getting you into this second or third choice. Sure, it’s not your dream school, but it might be the more realistic option for you. And that might be the strategy that you want to play in that market.

Pete Mockaitis
Well, now let’s not just talk about admissions. Let’s talk about career, job-hunting stuff. These principles sure seem to apply. We have one role opening available and hundreds of candidates applying on LinkedIn jobs, etc. So how shall we think about this hidden market strategery to boost our odds?

Judd Kessler
Yeah. So, again, this is a choose me market. There’s you as the applicant applying, maybe there’s 250 applicants applying to the same job posting. I’ve seen those numbers as estimates for how many people apply on average to a given job. And there’s a firm on the other side that’s trying to screen through those job applications.

So, I think from us as the applicant, on the applicant side, I think the traditional thing to think about is making sure that we look good as a candidate. We want to kind of make it so that the firm finds us very appealing. And one of the ways we do that is by kind of making, you know, being great and investing in skills and things like that.

What we often don’t think as much about is kind of the firm’s thoughts about us and our interest in that job relative to other options. So, in a lot of these choose me markets, just like the college wants to know that you will matriculate if you are admitted, like they kind of care about yield, firms care a lot about it for a different reason.

They want to hire folks who will stay with the firm for a while, “If I’m going to hire you, if I’m going to train you, I’m going to invest in you, I’m to plug you into my team, I want to make sure that you’re actually going to be a good investment and be with the firm for a while.” And so, one thing that we don’t think about as much, or maybe as much as we should, is, “Are we communicating to the firm that they are actually, like, are one of our top choices?”

And we would not only be happy to accept a job, right? Obviously, we’re applying, so we would think you would apply only to jobs you would take, but also that we’re likely to be there for a while and add a lot of value to the firm. And the way we used to send those signals, and maybe in some markets we still can, is through things like long, detailed cover letters, right?

So, the reason we have so many people applying to every job posting is it’s so easy to apply. You press a button and your application goes. But to signal that this is actually, like, one of your favorite job opportunities and, thus, probably a job that you would stick with if you were given the opportunity, those jobs we give extra attention to.

We write kind of long, detailed cover letters that explain why we would be a good fit for the firm, how we see our background fitting in and adding value, and we’ve researched the firm, and so it’s clear that we care. And in the old days, you would only do that for, you know, it takes a bunch of hours to write that cover letter, and you would only do it if the job was really one of the few that appealed to you.

The reason I say it’s kind of something that used to work, and might not work for all that long anymore, is that large language models are making writing that cover letter kind of vanishingly easy. And so, that way that we used to signal to firms that we were a good fit for them, that we were really excited to be there, it’s kind of, it’s not going to be something we can rely on forever.

Pete Mockaitis
Just very recently, I had a podcast guest, Madeline Mann, who’s discussing some of these ideas. And one alternative signal is, if your LinkedIn profile headline is matching the kind of role that they’re thereafter. So, if you say “food marketing” and, sure enough, it’s a food marketing role, “Well, that looks good.” Like, you are for real. You’re into this. As opposed to just any kind of marketing or any kind of food.

Judd Kessler
And that’s great because that’s the kind of signal that you can’t send to multiple different firms about different roles, right? You have to pick one and it’s a public statement that you’re making to kind of everybody that, “This is the thing that I care about.”

There’s a tradeoff there because it could be kind of limiting. Like, maybe you do have multiple interests, not just food marketing, but marketing of other products, other consumer packaged goods, for example, then you are kind of, you might want to have signals that you can send to a subset of firms.

And those might be things, like on LinkedIn, kind of engaging in a real way with folks that are already at the firm, kind of engaging with their content and making comments. It could be networking.

There’s a way there to signal that, “This is a firm that I care about. I clearly have talked to a bunch of people that work there and gotten to know the place,” in a way that can’t be replicated with AI.

Pete Mockaitis
Well, and in terms of knowing the rules, I mean, that can be so wildly different, job post to job post. Some job posts, unfortunately, aren’t even really available to outsiders. That’s just a formality. They got to check the box, the legal, the HR, the whatever, compliancy thing. So, there’s that.

Or other times, it’s like, “Well, we’re going to do this just in case someone just blows our mind with a wildly awesome resume, but most likely it’s probably going to be someone that we’ve talked to at some point earlier in the process and we’re vibing with.”

Judd Kessler
Yeah, and it’s funny, when you think about how much energy to put into a job application, say, or networking with the firm, then it’s you on the other side of that. You want to know that the firm is actually serious about hiring somebody before you invest. And that’s the analog to the firm wanting to know that you’ll stick with it if you get hired. It’s the same problem, just from the other side.

So, I think probably seeing if the job posting is being advertised widely by the firm, they don’t do that when they’re posting the job just for a legal requirement, just to like kind of say they did it. But if you’re starting to see them kind of posting, or people that work there being like, “Hey, we’re looking to fill this role. Great people, come apply,” all of a sudden, that’s a signal to you, like, “Oh, maybe they actually are looking for somebody. Maybe the person they met early in the process turned out to take another job, and now it’s up for grabs.”

But again, in that environment, you’re on the side where you have to decide how real is this job opportunity. So, I can understand why people play a numbers game applying to lots of jobs. You want a job, but a successful kind of efficient outcome, in the econ speak, efficient way of kind of that market resolving is when a firm finds somebody that’s going to be a good fit. And that means both they like the candidate and the candidate likes the job.

Pete Mockaitis
Well, let’s say we’re zooming into, okay, you’re in a job right here, right now, and you would like to have cool projects, cool opportunities, advance, receive promotions, etc., are there any hidden market principles or strategies that you’d surface for us here?

Judd Kessler
Yeah, so I love that because if you start to think about what a hidden market is, it’s when there’s a scarce resource, “We’re not going to just raise the price to decide who gets it. We’re going to have some other set of rules.” Well, that describes our time and attention very well.

We have a limited amount of it. We’re not going to have people pay us to respond to their emails or take a meeting. Maybe some consultants or corporate lawyers might do that. But for the rest of us, we are deciding how to allocate our scarce resources to the projects and the people and the activities that matter most to us. And so, thinking about the same principles of, “What is this market trying to achieve? And is it doing it? And is it doing it in a way that we kind of value?”

So, when I look at a hidden market, and particularly as a market designer, kind of deciding how to allocate my resources and in this case, my time in my email inbox or the time on my schedule or kind of which projects I focus on, I think about whether the allocation is efficient, meaning it puts my resources to the best use. I think about whether it’s equitable.

Like, if I want to treat two people kind of fairly, the same, am I actually doing that? If I have two managers, and I want to make sure that, kind of, both are happy with me, like am I doling out my resources appropriately?

And then is it easy for market participants? Are the people who are trying to get my time and attention, like am I making them go through an ordeal to get it? Do people, do my subordinates have to send me 12 follow-up emails to get me to respond? Like, that’s not an easy way to operate.

And so those same principles can help us kind of think about, “All right, are we designing this in a way, our own allocation of time and attention, in a way that actually achieves our goals?”

Pete Mockaitis
Yes, that gets me thinking. And so, do you have any fun examples or stories of any clever professionals who were doing some things?

Judd Kessler
Yeah. So, this was something that I came to when I was doing research for the book. So, it’s going to start out outside the office, but I’ll bring it in. So, the Colorado River runs through the American Southwest and delivers water to California and a lot of the states in the Southwest, into Mexico. And the way that the rights to the water in the river were allocated was using a hidden market with the market rules, “First in time, first in right.”

And what the rules were was that whoever was the first to tap the water from the river to kind of pull it out of the river for their use, it turned out to be California in 1901. They pulled it out to irrigate their farmland and they’ve been using it ever since. And the rules were, whoever tapped the river first, if there was a drought, that state got their water rights kind of guaranteed.

And the states that tapped it later, like, think Arizona, their rights were subordinate. So, if there was a drought, California would still get their water, but Arizona would not. And you think about that and you think about, this was a race that was run 120 years ago. And at that time, Phoenix, Arizona was less than 10,000 people and now it’s almost 2 million, so it doesn’t seem like, like those rules don’t make sense, “Why should we give California all the water that they want and Arizona has to cut back? Should we care about how efficient the water use is and whether the allocation is fair?”

And I was reading about this, and I was like, “Yeah, this is so silly. Why would anyone have these rules?” And then I looked at my calendar for the week, and I was like, “I’m doing this constantly. Every recurring meeting that I’ve set up is first in time, first in right. A year ago, I started this project. I set up a meeting. Once a week on Thursday, 10:00 a.m., we’re going to meet every Thursday. And now I schedule a meeting for a new project.”

I have to squeeze it between these meetings I set up months or years ago for projects that, independent of how valuable that hour of my time is, I’ve kind of set up a system that looks like the system I was making fun of when I was reading about it.

And so, that for me has got, I basically pulled off all my recurring meetings. My teaching, obviously, sacrosanct, I teach when I teach, but any kind of project, it’s like, “We’re going to decide case by case whether we should be meeting or not.”

Pete Mockaitis
Well, yeah, that is compelling, to look at those recurring meetings and see, “Is that sensible?” And it’s funny how we just accept, “Well, this is what the calendar says.” It’s like, “Well, wait. Wait a minute. Wait a minute. I actually have some authority, autonomy, in driving this thing here and saying, ‘Hey, like I recently changed my recurring podcast meeting times to facilitate school pickups.’”

It took me weeks before I was like, “Oh, yeah, it’s kind of tricky. I mean, I got podcast interviews there.” It’s like, “Oh, I could just change the slots available for people to take for their interviews.”

Judd Kessler
This is like so much, so many of the hidden markets that are out there, and that I talk about and saw when I was researching the book. Like, a lot of them are just historical accident, like, “We always did it this way, and so we continue to do it this way.” So, it’s true of, when you put a meeting on your calendar that recurs, it’s kind of set it and forget it, and you have to remind yourself, “No, it is under my control,” as you just said.

But we talked at the beginning about live event tickets and having to click faster than everybody else. It is not clear to me why we use first come, first serve races for ticketing. Like, I understand why when, before credit cards and before the internet, like it made sense to say, “All right, people have to be there physically to buy tickets from the box office or buy tickets from a record store that would sometimes sell them for concerts.”

And you want it to be efficient so you want people who care more to get the ticket. So, what are we going to do? We’re going to have a line and the people who wait the longest, like they’re clearly the most kind of motivated. Now there’s some efficiency gains there, in the sense of like you’re giving the tickets to the real diehard fans because they’re spending the night, you know, overnight, camped out in front of the Box Office.

It might not be equitable. There are some people who don’t feel safe sleeping on the street in front of Box Office or a record store. And it’s not easy. I mean, it’s an ordeal to spend the night there, but you could understand why you would do it that way. You move it to the internet and now it’s whoever can program the fastest bots gets to buy up the tickets.

And it’s like, “Why are we still doing first come, first serve?” Like, when you look at these markets and the market rules, and you think, “Oh, well, of course we do first come, first serve. That’s how we’ve always done it.” But maybe that’s not the right way to do it anymore.

Pete Mockaitis
Well, yeah, absolutely. Well, you got me thinking in terms of there is…well, that’s a fun title you have – market designers. I was like, “What exactly does that mean? Oh, that’s what this means. Thank you.” There are so many ways that can achieve the outcomes that you’re after, it’s like, “Yeah, we want the diehard fans.” And so, it could be very well, especially with all this technology, it’s like, “Okay, well, if you’re on the email list, how long you’ve been on that email list? How often?”

Because, I mean, my own email software will tell me who are my most engaged email subscribers, in terms of opens and clicks, and how long they’ve been around and they’ll even, like, put some numbers on it. So, it was, like, you could very well roll that out in terms of the super-engaged email subscribers are the ones who get the first crack at being able to buy these tickets.

Judd Kessler
And there are innovations in that direction. Like, the Ticketmaster has something called “Verified Fan.” I think it’s more about, like, trying to figure out who’s a bot and who’s a real person. But you can, and they have kind of built-in, like, “Okay, do you stream Taylor’s videos? And are there ways to kind of indicate that you are more engaged?”

But another way that I like, and I talk about in the book, is how about just flexibility in when you will see the show and where you will sit? So, if you asked me how to allocate tickets to The Eras Tour, I would say, “Well, what if we just did, like, kind of lottery section by section? And you could say, ‘I will sit in any section of any stadium within these four cities on any night.’”

That person will have a higher chance of winning than somebody who’s like, “I only want to sit in the premium seats on the Saturday performance in my hometown.” And that is a way of indicating that you are a real fan of basically being, ultimately, flexible to move around the rest of your schedule. And so, kind of a lottery structure, which gets used for kind of rush tickets and in other contexts.

That strikes me as a nice way of saying, “These are the people who really value it because they are basically entering themselves in for every possible chance to get to see this artist perform live.”

Pete Mockaitis
And it also has me thinking about the movie “War Games,” where the computer says something like an interesting game, the optimal choice is not to play. And sometimes, as you really think through these hidden markets, and you understand the rules and how they work and what you have to gain or lose by participating, you may make smarter choices, like, “Oh, it’s not worth playing this game at all. Maybe I need to try to invent my own game over here. I got to invent a different opportunity to accomplish what I’m after, rather than entering the meat grinder mosh pit over here.”

Judd Kessler
No, and people do that. They look at markets and they think about, “How difficult will it be to be a market participant? And what is the chance that I get what I want?” And when you look at that, when you see the hidden market, you understand the market rules, and you think about what strategy you’d play, you might decide, “You know what? I’d rather not.”

There’s a great ice cream parlor about 10 blocks from my apartment, and on some Sundays, they give away free sundaes at 3:00 p.m. And my kids are like, “Oh, it would be great if we get a free sundae.” And it’s like, “Yeah, but I think it’s going to be crazy when we get like, we’re either going to have to arrive super early or there’s going to be shoving matches.”

And it’s, like, even if the whole family goes and we get five free sundaes, like, it’s probably not worth it. We’ll pay full bore for the sundaes some other time, right? But we have to decide in these situations, like, “Is this a market that is really worth it for us to be in?” Or should we be trying to go to a different restaurant, go to a different live event, wait until there’s less demand for this kind of very popular show and go see it later?

Pete Mockaitis
Lovely. Well, Judd, tell me, anything else you really want to make sure to mention for professionals looking to be awesome at their job, thinking hidden markets and being more effective?

Judd Kessler
Yeah, I mean, there’s other examples in the book that are kind of about not just how we allocate time and attention, but how we allocate other resources within the firm, like financial resources or kind of budgets that you might be in charge of allocating. And it’s the same kind of logic of thinking through “What are the incentives you’re creating for people on the other side of the market?”

So, I teach in one of my classes for executives in the executive MBA program at Wharton, about American Airlines had their AAirpass, and other airlines had similar products where they basically sold unlimited first-class tickets. Like, you could buy a pass that basically gave you as many first-class ticket flights as you wanted for as long as the pass holder lived.

And it was a strategy in the late ‘80s and early ‘90s to get a bunch of cash early when the airlines needed it. But it turned out that when you set the price of an airline trip to be free, but it’s very costly for you to provide that because it’s crowding out a paying customer, then, all of a sudden, you are kind of creating this incentive for folks to fly constantly.

Many of them are still alive and they cost the airlines millions of dollars a year. And it might not be a smart move for you to offer kind of membership style services where you give a lot of benefits away for free that kind of continually costs you. And it kind of speaks more broadly.

Like, if you’re in charge of budgets, like use it or lose it budgeting where you give folks money, and you say, “If you don’t use it, we’re going to take it back. Or, worse, if you don’t use it, we’re going to take it back and give you less next year.” Like, you’re creating the same kind of incentives of people to just, you know, at the end of the year, be like, “Oh, we haven’t spent this all. Let’s go on a spending spree.”

Pete Mockaitis
“All right, 50 iPads. I guess we’ll buy them.”

Judd Kessler
“Yeah, that’s what we need.” And research shows, like when the government does this, and they evaluate the projects that get bought at the end of the fiscal year, they’re bad. They’re not good projects. They’re the groups that have these funds kind of just spending the money so they don’t have to give it back to the US Treasury.

Pete Mockaitis
And really thinking about the market participants and their incentives can really help cut through a lot of the noise. And I’m looking at on my bookshelf, I got Thomas Sowell’s “Basic Economics,” in which he says that, “We really shouldn’t evaluate policies based on their intentions because most of them are great. But we should really think about what are the incentives that are creating and, thus, the likely behaviors.”

And it’s funny, as I think about some digital marketing type stuff, and people really stress the algorithm, it’s like, “Ooh, how can I get to the top spot of Google or the recommended videos in YouTube?” And so, they think about all these things, “Well, there’s my keyword density, and there’s my thumbnail, and there’s my, compelling clickbait-y title,” whatever.

But often, it actually could get pretty simple. It’s like, “Well, what Google wants people to do is keep Googling. So, if you want to be in the top spot, ideally, you will just phenomenally address the question that people are Googling. Or, what YouTube wants people to do is keep sticking around YouTube and being served ads.”

So, ideally, if you could be so engaging and captivating that they watch your whole video and then want to watch more of your videos, then you’re doing just what YouTube wants and they’ll automatically get the memo and try and shove you in places. And so, I find that this approach of just thinking from the higher-level principles, the participants and their incentives, can cut through a lot of noise to get you after. What do we really got to focus in on here?

Judd Kessler
Yeah, and a lot of times, I mean, I think we’re trained to do this, to think that kind of we have to outsmart the system, that, “Oh, we have to kind of play a strategy that’s too clever by a half.” And it’s like, “No, sometimes you don’t want to do that. Sometimes you want to just deliver high-quality content because that’s what’s going to be the best possible outcome.”

But you’re exactly right, that thinking about the incentives of the people that you’re participating in the market with, whether it is people competing against you or people on the other side of the market who you’re interacting with, is the ball game. I talked about your time and attention, I used to want to be a good professor and I want to be responsive to my students. That’s the intention of the policy.

When students would email me, I would try to respond as quickly as possible. And I realized a lot of the questions they were asking me about were stuff that they could easily find out if they read the syllabus or kind of did the old meme of like, “Let me Google that for you,” where you, speaking about Googling, just like kind of saying, “Hey, this is something you can find out on your own. You don’t have to ask me.”

It made me realize, like, I have to stop responding to these emails because I’m creating more work for them. They have to email me and wait when, really, I should be teaching them to kind of gather the information, get the information on their own. And I’m creating a ton more work for myself because I’m responding to all these emails I don’t need to.

So, if I just kind of lay off and say, “Hey, if you have a question, look at the syllabus. If you ask it to me, you know, I’ll get back to you, but it might take a couple of days.” Like, that has dramatically shut down the number of, kind of unnecessary communication, kind of waste of everybody’s time, and particularly mine, that I’m doing, again, because of this change in the incentives that I set up for people on the other side of the market.

Pete Mockaitis
All right. Thank you. Well, now could you share for us a favorite quote, something you find inspiring?

Judd Kessler
So there’s a quote by Seneca, the Roman philosopher. It’s attributed to him, these old quotes, you never know. “Luck is when preparation meets opportunity.”

The other one is one that I worked really hard to make sure was in the book. It’s in a footnote. One of the market rules that I talk about is first come, first serve waiting lists, where you put your name in, you kind of wait. So, I got in this quote from The Simpsons, where Homer comes back from the video store, and Marge, his wife, asked him if he got the movie, and he says, “Well, they put us on the waiting-to-exhale waiting list, but they said, don’t hold your breath.”

I was like, “I’m going to get that in. I’m going to, really. I’m going to do it.” Editor back and forth, but it’s in there. It’s in there, it made it in.

Pete Mockaitis
All right. And a favorite study or experiment or bit of research?

Judd Kessler
Yeah, so there’s a great one that I talk about in the Choose Me Markets chapter. It’s a dating study, and it kind of dovetails really nicely with the labor market studies. A lot of the economics that is happening is the same across those two. But it’s a South Korean dating market, and folks have to pick 10 people that they want to match with and maybe kind of meet in real life.

And the researchers vary whether they have eight or two signals, special kind of, they call them roses that they can send along with their proposals to meet with somebody on the other side of the market. And it’s a really great study that looks at kind of, “What is the effect of these signals? And are people using them correctly?”

And they, typically, do not. Everybody sends their roses to the kind of most attractive people on the other side of the market. But the optimal strategy there is to send them to people who might be surprised to learn that you are interested in them, that you are kind of, they might have thought you were out of their league, and here you are kind of saying, “No, I’m actually really interested in you.” That’s when these roses, that’s when these signals are super effective. I really liked that study.

Pete Mockaitis
All right. And a favorite book?

Judd Kessler
So, I have to say the kind of book that comes before this one, in terms of a pop economics book about market design, is Al Roth’s book, Who Gets What — and Why, which kind of sets the stage for a lot of what I talk about in my book.

Pete Mockaitis
Okay. And a favorite tool?

Judd Kessler
So, I really like the snooze feature in Google, in Gmail. I used to use Boomerang, a kind of third-party add-on, but this has really helped in me achieving some of my goals. Like, for example, not responding to student emails right away, so I can just snooze it for three days, and then respond. So, I won’t forget to respond if they do need help, but it trains me not to just kind of react to the fact that somebody sent me 12 follow-ups.

Pete Mockaitis
Okay. And a favorite habit?

Judd Kessler
So, I have gotten in the habit of making sure that I get some time for myself, maybe not every day, but a couple of times a week. So often that’s working out, but sometimes it’s just going for a walk. And in the book, I talk about how important it is to give some of your scarce resources, like your time and attention, to yourself, but I’m trying to live that better. But actually, I find it makes me more productive and more attentive and engaged when I am devoting time to other projects or people.

Pete Mockaitis
All right. And if folks want to learn more or get in touch, where would you point them?

Judd Kessler
So, I would point them to JuddBKessler.com, B is my middle initial for Benjamin, and that’s my website. They can also go to GetLuckyByDesign.com. It takes them directly to the book page. And they can find me on LinkedIn.

Pete Mockaitis
Okay. And do you have a final challenge or call to action for folks looking to be awesome at their jobs?

Judd Kessler
I think they should think about the hidden markets that they control, and whether their rules that they have set up for those markets are actually achieving the things that they want them to achieve, or whether they’re kind of, they’re doing what they’ve always been doing and kind of the inertia is holding them back. And I think if they look at these markets with fresh eyes, they might be much happier with the outcomes that get generated.

Pete Mockaitis
All right. Judd, thank you.

Judd Kessler
Thanks so much for having me.