In short
The Art of Charm: Episode Summary
Episode Title
Luck Isn’t Random—It’s Designed
Guest
Judd B. Kessler
Episode Overview In this episode, AJ and Johnny engage with Wharton economics professor Judd Kessler, author of "Lucky by Design". They delve into the hidden dynamics of various life markets—dating, job hunting, and more—and discuss why some individuals consistently come across as "lucky." The conversation illuminates how to navigate these markets by understanding their underlying rules and strategies, illustrating that luck can often be a result of design rather than happenstance.
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Key Concepts and Discussions
- Understanding "Lucky by Design"
- Hidden Markets: Kessler defines hidden markets as environments where allocation does not depend solely on prices but rather on signals, timing, and strategy.
- Examples of Hidden Markets: Involves arenas like job applications, dating, and concert tickets where traditional economics does not apply.
- Choose Me Markets
- Definition: Markets like jobs, schools, and dating where the decision-making power lies with the other party.
- Key Signals:
- Competence: Demonstrating skills and abilities.
- Real Interest: Signaling genuine interest can sometimes outweigh mere qualifications.
- The Importance of Signaling
- Excitement and Persistence: Kessler shares Johnny's experience breaking into music scenes through excitement rather than just skill, emphasizing the value of showing commitment.
- Idiosyncratic Signals: Unique traits or hobbies can be more effective in making an impression than conventional traits.
- Costly Signals
- When to Use Them: Costly signals (e.g., extravagant gestures) should be reserved for targets who might appreciate them; those who are less desirable often don’t need such signals.
- Settling for Silver: Sometimes indicating interest in a second-choice option can lead to better outcomes than aiming only for the top choice.
- Gaming the System
- When It Works: Strategies for navigating difficult markets, such as college admissions or job hunting.
- When It Backfires: Misguided attempts to game the system can lead to unfavorable outcomes, especially in "choose me" markets.
- Example: The discussion of ticket sales and resale markets, highlighting the complications caused by bots and speculators.
- Designing Your Own Luck
- Email Management: Kessler shares strategies for managing email effectively, including prioritizing responses by recentness.
- Building a Plan B: Having a strong alternative allows individuals to take more risks in pursuing their primary goals.
- Household Dynamics and Chores
- Equity in Relationships: Discussing the division of household responsibilities to ensure that both partners feel valued and respected, avoiding resentment.
- Conception vs. Execution: Understanding the roles in household management and the importance of equitable division of labor.
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Key Takeaways
- Control Over Luck: Luck can be designed through understanding market rules and strategic signaling.
- Effective Strategies: Innovate in signaling interest and managing perceptions in various markets.
- Importance of Planning: Having a Plan B provides the safety needed to pursue higher-risk opportunities effectively.
- Equitable Relationships: Sharing responsibilities equitably leads to healthier dynamics both in personal relationships and in broader social interactions.
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Episode Resources
- Book: "Lucky by Design" by Judd B. Kessler
- [Visit Judd Kessler’s Website](http://judbkessler.com)
Hosts' Links
- [AJ on LinkedIn](#)
- [Johnny on LinkedIn](#)
- [The Art of Charm on Instagram](#)
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Conclusion This episode offers valuable insights into the often-overlooked dynamics of various life markets. By applying the principles discussed, listeners can enhance their strategic thinking and approach to achieving their goals, whether in personal or professional contexts.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
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0:48No spin, no judgments, just the facts straight from the experts for more than 140 beverage ingredients. Visit GoodToKnowFacts.org. The thing about a hidden market is that it's deciding how to allocate a scarce resource without relying on prices.
1:15All right, let's kick off today's show. We're talking with Judd Kessler, economics professor at Penn and author of Lucky by Design, the hidden economics you need to get more of what you want. We're exploring the hidden markets that control your life, from dating to job hunting to Taylor Swift tickets, where money alone won't get you what you want. Success in life's most important markets, jobs, dating, college admissions, requires understanding their hidden rules. Judge shares why signaling interest beats being perfect, how settling for silver gets you gold, the real rules behind choose me markets, and why gaming the system often backfires.
1:55Welcome to the show, John. It's great to have you. Awesome. Thanks for having me. What does it mean to be lucky by design? Great question. I think about luck as something that you actually have a lot more control over than you might otherwise think. And you have luck in these, what I call hidden markets that allocate things without relying exclusively on prices. I'm an economist. Economists love prices. But being lucky by design means figuring out how to operate in these hidden markets and getting what you want. Many of us probably aren't even paying attention to what's going on here. So what are these hidden markets that we need to be aware of?
2:31Economists, we fetishize prices. We really love prices. So if you've ever heard an economist say, supply equals demand, that's a statement about prices deciding who gets what in markets. And those markets where you just decide you want to buy something and you go to the store and you pay a price and you get it. That's a visible market. That's easy to do business with. It's easy to understand and see. Hidden markets are markets that allocate things in some other way. And there might be a price involved, like you want to go see Taylor Swift perform. You'll pay for a ticket, but the allocation of the tickets is not being done by raising the price until the market clears, until supply equals demand.
3:10That doesn't happen. There are many more people who want to see Taylor Swift perform at the prices that the venue charges. And the same thing is true of restaurant reservations at popular restaurants. When you're thinking about buying a hot product, like a clothing drop or in the old days, iPhones, there'd be lines that would be around the block. And those kinds of markets, you're paying a price, but that's not what's deciding who gets what. There's hidden rules, hidden market rules that are determining the allocation. And then all sorts of other markets, dating markets, labor markets, markets for college admissions or elementary school admissions, markets for life-saving organ transplants.
3:48A lot of these markets, we don't even think about using prices because it wouldn't be fair to give organs to people who are willing to pay the most. It wouldn't make sense to have dating markets be based on paying. So we have other rules that come up in those markets. And to succeed, you have to understand them. Let's start to break down some of those rules because I think a lot of our audience wants to succeed in all those hidden markets. The nice thing about these hidden markets is that the rules are often familiar. If you're trying to get a restaurant reservation at a popular restaurant that releases all of the desirable reservations for next month on the first day of this month.
4:27So this is true of some of the hardest to get reservations. If you want a reservation in November, they'll be released on October 1st. the market rules there it's a first come first serve race so whoever is the first to click gets the reservation and if you're not fast enough you don't get it other market rules look similar so first come first serve is a common way that we allocate things in hidden markets but they operate like waiting lists where you put your name down and then you have to wait the earlier you get on the list the faster you'll get called you've got to wait around for your turn There might be lines where you're waiting, but you have to physically be there.
5:03So it's much more costly to participate. And then there are rules that are based on lotteries, got to enter in the hopes of being selected, or markets where you rank your preferences. This is my first choice, second choice, third choice. And you have to know how to use those preferences appropriately to succeed in those markets. For many of us, one of the first times we're encountering one of these markets is school or job, where we're applying to something that we want really badly. And we're competing against a lot of other people. And it's not just waiting in line longer. These are the most interesting, some of the most interesting markets, because the markets I described up until now, those market rules, there's two sides.
5:44There's the folks trying to get something and the folks giving it to them. But the first come, first serve and the lottery, those are ones where there's some kind of algorithm deciding who gets what. In dating markets and in labor markets, those get more interesting because there's actually someone on the other side of the market who is choosing you. I can't say, I want to go to this school for college or I want to work at this firm. I can have that preference, but that institution has to choose me as well for it to actually work. So there's a lot of particular strategies that you have to play in those markets.
6:17to succeed. How do we know when we're in a choose me first market versus an algorithmic? Because it's obvious in those examples, but there are a lot of other cases where we might not even realize. The key is, and this is the theme of succeeding and hidden markets. So you have to know that they exist, then you have to learn their rules, and then you have to figure out the optimal strategy. So you've just asked about the middle step, right? I know that this is not just I pay more and I get it. So I know it's a hidden market. So I've identified that. Now I have to figure out, okay, what are the rules?
6:48When I look to see what the rules are for elementary school admissions in New York City, where I'm from, I can read about it. I can see that there's some priorities that I can get, but there isn't another person at the school saying, I like this application better than that application. I like this family better than that family. That doesn't enter in. It's just where I live and whether I already have a kid at the school or not. But then if I were to, instead of applying to public school, I were to apply to private school, then all of a sudden I know, okay, there's an application deadline. I want to apply by that deadline.
7:22But there's an application where I write essays, where I talk about how well my family values align with the school's values, right? It's starting to become clear that there's going to be somebody evaluating me on that side. And so once you see, okay, they're asking me to provide detailed personal information, right? And in a labor market, that's a cover letter, that's a resume, right? Like it's not, this is not going to be a algorithmic selection. This is going to be them trying to figure out whether I'm a good match for them. Let's talk about that because strategic signaling here is really important when we're talking about these opportunities where someone is choosing us over someone else.
8:00This is where the kind of thinking through the strategy is helpful or potentially the most helpful. The way I like to think about these markets is that there's two things that you're trying to achieve when you're signaling. First one, I think, is the more obvious one. It's like, we want the person on the other side of the market or the organization institution on the other side of the market to like us. So we need to be put our best foot forward, look as good as possible. And so I think people mostly focus on that. That's the obvious one. But there's a second one that people often undervalue to their detriment, which is signaling that you as a candidate are very interested in the organization and would be likely to stay there and be a valuable addition for a long time.
8:43This phenomenon is true in all the markets we talked about. So it's true in college and elementary school admissions market where they care about yield. They want to know if they accept you, will you matriculate? So they can say 90 % of the people who we give an offer to will come. That makes them look good. It used to be for colleges and like the U.S. News and World Report rankings. It's not anymore, but it's still a matter of pride. For a labor market, if you apply for a job, they want to know that you're going to stick around. They don't want to hire people who are going to be there for a paycheck and then a couple of weeks later get a better job offer in bounds.
9:17They want somebody who's going to invest in the long term. And then on dating markets, this could depend on whether somebody's looking for something serious or not. But if you're looking for someone to be with for the long term, you're going to want to know that this person is actually interested in you for that. So you have to both signal that you're good enough to be in their choice set, but you also have to signal that you are interested enough in them that they will be some organization or person that you will be with for a long time. This was something I figured out early in life. Moving to North Carolina to begin my music career, moving to New York to start The Art of Charm and looking to play in some bands.
9:58And of course, I did the same thing when I was moved to LA. When you're the outside guy looking in, it's much difficult to get that guitar position, right? Oh, we need a rhythm guitar player. We need a lead guitar player. It dawned on me pretty quickly that the guy from out of town who may or may not be good is not going to get looked at. And it didn't take me very long to realize I'm not the greatest guitar player on the planet. I'm not going to win that game. And the only thing that I have is to be more excited about this opportunity than anybody else. And I use that to my advantage, especially when I moved to Chapel Hill, North Carolina, I was 21.
10:45Excitement was all I had. And so I was, and this is before cell phones and people are lucky because I would have been texting them every day, but I was calling people every week. Did you fill the spot yet? I'm ready to go. I learned all the songs. I've been playing them all week, just getting in people's ears and eventually wore people down. They were like, yeah, you know what? Why don't you come in and let's see what you got? And that served me incredibly well. That got me all of my breaks. And of course, As you get older, you learn to refine how you're going to show that signaling and let people know those things.
11:23Texting them every day is also going to have the opposite effect for a lot of folks too. Refining that process and figuring out how do I pack the most in each little signal, letting them know that I'm going to be the guy that you want in your band. And not only I'm going to be a great fit, we're going to have a lot of fun. You're going to have somebody who's going to show up to rehearsal excited every time. and of course getting that opportunity then you have to show i am the guy who's been calling you and i'm going to show you that so it's then it's how you're going to show up to every one of those rehearsals but aj will tell you i was playing in bands in new york within six months and same thing in la and being in la for 10 years i lost i probably forgot more bands i played in than could remember and that goes the same for my whole career no that's awesome i don't talk about joining a band as one of my examples in my book, but it's true, right?
12:16You want somebody who's going to be motivated, be fun to be around, be a good guitarist, sure, but also that they're not going to leave town the next day, that they're not going to find a better gig and leave you in the lurch. And so it's the same dynamic of saying, yeah, I don't want to come off as too pushy, too aggressive, you want to send signals that say both. I'm going to be fun and easy to work with, not annoying, but I'm also going to be there and I'm not going to let something else come in the way of my being in this band.
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15:52Just go to Indeed.com slash charm right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash charm. Terms and conditions apply. Hiring Indeed is all you need. In a lot of these situations, we tend to try to play it safe and we default to signaling the same way everyone else is. and you write that actually idiosyncratic signaling goes a long way to actually being a powerful way to get your foot in the door. But oftentimes we don't wanna talk about the things that make us weird or different. We wanna talk about the things that we think we level up with everyone else.
16:29I'm glad you said idiosyncratic so I didn't have to be the one to say it because I always feel like the wonky economics professor when I'm the first to say it. But yeah, the way that we think about preferences, the way that I think about preferences, I think this is true of many economists like me, is that there's two types of preferences that drive you. And in Choose Me Markets, it matters a lot. One is general preferences. We all agree on better guitar players are going to be better to have in our band. More, there are people who are conventionally attractive, classically handsome, right? Like we all agree that, or I should say not all, but like in general, we agree that is more appealing, say in a dating partner.
17:06But we also have idiosyncratic preferences. If all we had were general preferences, is you could rank everyone from best to worst and it would be a boring world to live in. There are things that we like that do seem strange. I have hobbies that other people don't have. I have certain weird movies that other people might not like. I find certain physical types attractive that might not be the general preference. And so when that happens, when you have something that you particularly value, that is the thing that is the most effective to signal your interest in. Because somebody who has a weird set of hobbies, if you signal, like, I actually am interested in those very same things that you are, then all of a sudden they can say, oh, this is somebody maybe who I might have even thought was out of my league.
17:52I might have been worried that this person wouldn't be somebody who would be good for me in the long term, that they would actually be interested in me. If they're interested in my weird hobby, maybe then that is something that we are, could be a good match, that they're actually interested legitimately in me for a longer term relationship. And there's research to back this up with the studies of people who, when they, it's a South Korean dating service that kind of, it predates the swipe apps, but it's like a similar kind of structure where you can ask to be matched with up to 10 people. and some of those matches or some of those proposals, you can add a rose to it.
18:30So it's like a super swipe or super like, or I think Hinge calls these things roses, where you basically say, I'm really interested in you. I'm particularly interested in you. And the researchers found these things work, these extra signals work, but only if you sent them to people who might have been worried that you weren't actually interested in them. You send a rose to like the superstar that everybody loves, that everybody that's getting a ton of these roses, they don't care. But you send it to someone who might think that you're not actually interested. You send it to the band that might be worried that you actually want to play with somebody else, that's when the signal is super valuable.
19:03Our loss aversion gets in the way oftentimes and makes us more boring, especially in the dating market. And you don't even have to nail it on what's idiosyncratic about yourself in terms of passions, but it's actually showcasing that you have depth and you have an amethystism to yourself that makes you more interesting to other people. And oftentimes, even when we're working with clients who happen to be single, they'll keep that stuff close to the chest. And unfortunately, they end up that date being very boring and milquetoast and uninteresting. Whereas if they just leaned into their passions or their hobbies, even if the date on the other side didn't share them, they'd be showcasing something that stands out from the crowd.
19:47That's such an important point that people, that that is a natural instinct to do that we have to overcome because, you know, what you're looking for in these markets, in these choose me markets, you're looking for someone that's going to be a good match for the long term. And that also means, again, with these wanting to be good enough, but also wanting the person to know that, that you think that they're good enough. That's true for on the other side, right? I want to reveal the things that are weird about me on the earlier side so that I know if this person actually will be interested in me when they get to know the real me.
20:21I have this example when I think about labor markets. I could, as a young professor, I could go into an interview and when the folks who are interviewing me say, hey, what are you interested in working on over the next 10 years? I could pretend that I want to work on what I think they're interested in and what they want to hear. And maybe I'll even get the job. But then it's not just pretending for that 30-minute an interview. Then I have to pretend for 10 years that I'm interested in what they're interested in instead of what I'm interested in. I'd much rather get hired by a place that I'm going to do the research I want to do and they're going to be excited about it.
20:52And same with dating. If I reveal early on, these are my hobbies, these are the things that motivate me, that excite me. I want kids, I don't want kids, whatever it is. Finding somebody who's going to be excited about those features of you, those idiosyncratic things about you, that's going to be the way to get successful in those markets. These signals are costly and we want to use design and strategy here to be effective. So when is it actually going to work and when should we be investing and when should we not put so much time and energy in? The hint from that study is you don't want to be using costly signals on institutions or people who know that you find them desirable.
21:36You don't need to send somebody a signal who's getting a million signals because the signals, those costly signals like the super swipes or the, in the book I talk about some labor markets have the ability to signal to an employer that my labor market, the one I just described being an academic, trying to get an academic job as an economist, like we have a process where we can signal to a school that we are really interested in a job at their organization. and you only get two of those. The system that the American Economic Association set up for this process, you get two. And so you don't have to signal Harvard or MIT or like the really best schools that are the top of the profession.
22:17They know that you want to work there. The signal doesn't help them. Yeah, they're spoiled for choice. They can choose whoever they want. Similarly, there are people on dating apps or whatever you might feel like, okay, this person is really desirable. Everybody was interested in them. Yes, you don't need to use your signals on them. If it's a costly signal, use it on the organizations, on the people who will be surprised when they receive the signal, who will learn something that they didn't know before they got the signal. After they get the signal, they say, oh, AJ actually wants to work here.
22:49AJ actually wants to be with me. John actually wants to play in my band. That is something that it will be very helpful for that information to have taken place, that transfer. And so that's when you want to use those costly signals. I think it feels with the rise of technology and bots competing for Taylor Swift tickets that everyone is gaming the system and it's to our advantage to try to game the system. But what blew my mind in the book is actually there are some situations where gaming the system works against you and is costly in the wrong direction, even though it feels like everyone is gaming everything these days.
23:23The thing with gaming is that it really depends on the particular market. So one thing that, you know, back to the out of the choose me market. So now we're trying to get the Taylor Swift tickets or the restaurant reservations. There's some strategies that you can play that might feel like gaming, but I think it's just a general thing that we should be thinking about doing. And I can also talk about times when you should not game as well. But one of the strategies that is robust through a lot of different markets is what I call settling for silver rather than going for gold. And what it basically means is that sometimes you want to give the impression that something that is actually your second choice is your first choice.
24:08You want to act like something less desirable is the thing that you want most. And doing that gives you a much higher chance of getting something desirable. The first time I introduced this in the book, I'm talking about getting a reservation for a hot restaurant. This was for my wife's 40th birthday. I was trying to get her a French laundry reservation. in Napa Valley. The restaurant has 60 seats. It has 17 tables. It's ridiculous how hard it is to get a reservation. And I go and I know she's going to Napa with some girlfriends. I know the dates. I know which night I want to get her reservation.
24:44And as I described earlier, there's all the reservations for that month get released on a single day, in a single minute. And I go to the website. I'm there. I'm ready. I click as soon as, I think, as soon as the page loads for a 7.30 reservation on a Saturday night. And it's taken. I've clicked the button of the page reloads, it's gone. All that's left are four and 4.30 reservations. And I'm like, all right, this is my gift for her. I want to get it. So I click for 4.30, it's also gone. And it struck me then, if I had clicked for 4.30 initially, I would have gotten her a reservation because it was still available after the page reloaded.
Read the full transcript
25:18So that would have been settling for silver. That would have been pretending that what I wanted first was the 4.30 reservation. And the reason it would have worked is that it's much less desirable for folks to eat at 4.30, except maybe in some retirement communities, but it would have succeeded in getting her the reservation. How do you convey that to a type A person or just somebody? Because to me, being an entrepreneur, that's a hard pill to swallow. Sure. If that happens and you're like, I lucked out, I got something anyway, but I didn't get my desire. I know that there's still a sting to that that sticks with you.
26:08Look, it's in the name, right? I call it settling for silver. We don't want to be settling, right? It's not great. But I think if you think about the different environments when the strategy might be helpful, you can start to see it's a trade-off, right? There is a chance I could have gotten the 730 reservation, been the reservation hero, right? But I have to think about which is more important. Is it getting her something or getting her the ideal reservation? It also, think about this also with applying to colleges. So because colleges care about your decision to matriculate, they want high yield.
26:45They want to know if they admit you that you'll come. they have early decision a lot of elite schools or early action is a different version of this policy but with early decision you apply and if you get admitted you're basically committing to go it's like a guaranteed matriculation a guaranteed increase in yield but you can only apply to one school early decision because you're committing to go so you can't send 12 early decision applications. So then you have to decide where are you going to apply. Now, I talked about on the job market not wanting to signal Harvard or MIT. If you are thinking about applying an early decision to a school that you're very unlikely to get into because they have very high admission standards and your application just isn't there, then if you do that, even though that's your gold choice college, it's going to be a waste.
27:39If you were thinking more strategically, which type A personalities often like to do, like you should be applying to an early decision to a school that might be your second or third choice that would actually admit you, that there's some chance they would admit you if you applied early decision, but maybe wouldn't admit you if you applied regular because the schools are going to reward you with applying early because they want folks who are - Yeah, and it's a smaller pool of candidates by saying I'm early decision. Yeah, exactly. And the acceptance rates are higher if you apply early than apply regular.
28:08So there is an advantage. And if you apply early to a school that's a super reach school, that's really your gold choice, it's basically wasting that one shot. And so I think when you start thinking about these different settings where the tradeoff is apparent, then you can decide. It could be that you want to go for the superstar school or the super reservation, or if you're an entrepreneur hiring somebody to work with you, it might be that you only want to do the startup if you can hire the absolute best chief technology officer or something. But maybe you go after the slightly less good chief technology officer who's going to be excited that you're going after them and be there and be committed.
28:50And in that case, maybe the settling for silver will work. There's a great example of medical students trying to game the matching system and it actually working against them. I think oftentimes, again, we feel this pressure that everyone's gaming, so we should be gaming. A lot of the hidden markets that I talk about, that I've been talking about, are not designed by academics, not designed by economists. And so they have these opportunities to game. We think the gaming is hard for people, right? It rewards folks who are listening to this podcast and learning the tricks. because it rewards people who have invested more in figuring out how the system works.
29:27And so it would be nice if you could design a system that does not reward that kind of gaming, where it would be safe to just tell the truth. And then we can do the harder thing of thinking about, or the additionally hard thing, I should say, of figuring out what we like the best and second best and so on. And there are a bunch of markets and more and more every year that are designed so that it is safe for you to tell the truth. So we call it strategy proof. in economics, it basically means that there's no benefit to trying to strategize your game. So the residency match, which you just referenced, is one of those where the best thing that you can do in this market is rank your preferences, in this case for jobs at residency, at hospitals for residency programs, from your favorite to your least favorite.
30:11The same thing is true in a lot of school choice systems. So the New York City elementary school and high school admissions process now operates this way as well, where as a parent, I rank my favorite school first down to my least favorite. But it is absolutely the case. And a bunch of research has shown this, that people get into these systems, they are told the best thing you can do is rank your preferences. And they think that they think they can outsmart the system and they flip their preferences around and can be very dangerous or damaging. And I have this memory of being at a party where, it was match day for these residency programs.
30:50And so all the medical school students who were going to graduate and go on to these programs learned where they matched. And I talked to this woman and she was devastated. And it's like, what happened? Well, it's like, I got my second choice. I'm sorry, you didn't get your first. She's like, yeah, but really what I wanted was my third choice. I preferred my third choice to my second choice. And now I'm going to this place that I don't really want to go. I have to leave New York. And I could have switched my preference ranking, ended up getting to stay in New York. And it's like, oh man, I don't know what prompted her to do that, but it was, it's one of these things where when it's safe to be honest about your preferences, you got to learn that and then you got to follow through.
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34:03We obviously know these hidden markets that we encounter, but we don't think about ourselves as market makers. Help me with my email inbox where everyone is demanding my time. The thing about a hidden market is that it's deciding how to allocate a scarce resource without relying on prices. And once you think about it that way, a scarce resource that you control is your time and attention. How much time are you going to spend in that inbox? which emails you're going to respond to. I have not yet tried to get people to pay me to respond to their emails more quickly. That would be allowing price to enter in.
34:36So instead, we have to decide, all right, how are we going to allocate our time and attention? And are we going to do it in a way that benefits the folks that are trying to get it? And are we going to do it in a way that benefits us? My email inbox hacks are basically to... For me, it was as I was writing the book, thinking about this kind of stuff. I realized that a lot of what I was doing was wrong. I was responding to follow-up requests much more quickly than to somebody who sent me an email once and then let it be. And so by reacting to the follow-ups, I was incentivizing people trying to get my attention to just continually nudge me.
35:14And I reacted to that because I don't like being nudged. I don't like seeing 12 emails in my inbox all from the same person about this one thing I have to do. And so I was, if you told me that my kids were being more annoying to try to get my attention, I would like to understand, okay, I shouldn't reward that because that will create more tantrums. But with the email, I was rewarding the tantrums, so to speak. I was also prioritizing things that I thought I could do quickly. But of course, a lot of those things are not worth our time and attention. It feels good to get them done, but it's not actually beneficial.
35:47And so I stopped responding to certain types of messages and started to see that I got less of those messages. If I don't respond that quickly to my student requests for things that they can easily learn in the syllabus by just carefully reading the syllabus, then if I stop responding within 24 hours, maybe then they figure it out on their own and stop emailing me those kinds of questions. I apologize to any of my students who are listening. People might realize I'm strategically ignoring them, but it is a way to get people who are trying to get your time and attention to be more respectful of it.
36:22What happened to your professor rankings being unresponsive to your students? A slight ding, but probably overall I'm happier for it. But the benefit that I get from having a more sane work day is probably worth it. So let's talk about last in, first out collaboration because so many of us find ourselves in these situations. This is another email trick that I adopted to be more productive, which is when I have, so now I go to my inbox and I say, all right, I'm gonna ignore all the stuff that is not very essential that I work on today. That's not important and time sensitive. But now it's like, all right, I have 10 emails that are important and time sensitive.
37:03Which one am I going to deal with first? And there are equity considerations that maybe the person's been waiting the longest I should respond to first because they've already been waiting maybe a few hours for this response. but I actually flip it. So I do last in first out, meaning whoever's sent me the email most recently, I'm going to respond to first. And the reason is I think it's more efficient in the sense of a lot of what people are asking me for is feedback on something. And the people who have emailed me most recently might actually be working on it as I'm reading their email, that it might be that if I respond to them right now, then they actually are gonna be able to use my response in what they're doing, as opposed to somebody emailed me four hours ago, they've probably moved on to something else.
37:51And so whether I email them immediately or I email them two hours from now, like it will still be as useful for them because they're going to have to turn back to this project that we're working on together before they can benefit from my response. I'm thinking about all of your smart students listening to this podcast being the last one to email you, waiting till 5 p.m. They have to know when I'm logging in and that's the trick. So if I do communicate when I'm going to be checking email, then their optimal strategy would be to all pile in on that last second. But I mix it up so they don't know for sure.
38:24Another challenge, and Johnny alluded to this, is having a plan B. And so many of us want to go all in, and we feel that signaling all in works to our advantage. There's a cost to having a plan B. So walk us through what we can do strategically there to design our luck. the issue that johnny raised before about not wanting to settle for silver that's like a kind of a difficult pill to swallow one technique that you can use is having a good plan be a good economists call it an outside option something that you can fall back on if you don't get what you want from a market and the reason that's helpful is that then it's safer for you to be more aggressive, like going for gold.
39:09In the example from before, if I'm trying to get a restaurant reservation for my wife in the Napa Valley, and I've already secured a pretty good plan B. So I got Thomas Keller's ad hoc. It's like another, it's not the French laundry, it's like the same restaurateur and slightly less expensive, which is great for me. If I'm paying for the dinner, I have that as a backup plan. I can always cancel that reservation. there, that's a fine thing to do. I'm also thinking about this a month early because I'm trying to get the French laundry reservation. But if I have the ad hoc reservation as a backup, then I can be more aggressive in the primary market.
39:47Then I don't have to worry that if I don't get a reservation on Saturday night, my wife's going to be eating bad room service food, that I have something that I can use as a backup. And so sometimes having that backup can allow you to be more aggressive. It's the same logic as having a good safety school that you think you're going to be able to get into. If you really like your safety school, then maybe you can be more aggressive on your initial applications. Maybe you can apply to that super dream reach school with your early decision because you're going to get into the state school, like your grades qualify you and that's going to work out great.
40:20So that plan B could be kind of the comfort that you need for it to make sense for you to go for gold. I found the same in the dating markets, It's much to my wife's chagrin. Having a great plan B always helped me be more aggressive. As long as your wife never thinks she was the plan B, then you're golden. Exactly. We don't want to know what's going on behind the scenes. Now, one of the situations that I think many of us have found ourselves in is the Costco parking lot, where it is a true goal for gold situation. How do we discern that and walk us through what's going on there? This idea of like, when should you settle for silver?
40:57When should you go for gold? So the Costco parking lot is where I think you can develop some intuition for this. Costco parking lot, it's first come first serve. Okay, but it's dynamic, meaning that the first people into the lot are going to take the spots right by the entrance. As when you come later in the day, it's possible that the people who were parked out front have left. But usually when you are driving into the lot, you can't see the front of the store. There's all these rows of cars that block your view. And so you have to start deciding, okay, as I'm driving through, I see a spot. It's not great, but it's not that far a walk to the front.
41:30Should I take that? Should I settle for silver? Or do I go up to the front and go for gold? And in that case, you want to start to think about what do I have to gain if I drive all the way to the front? What do I have to lose? And there are some people, the reason I like this example is that there are some people who are like, they always drive to the front. They always try to get that ideal spot. They think it would never make sense to settle for silver. And then there are people who are like, I just take a spot. I don't care where it is. I never go for gold. I just take the first spot I see.
42:00But I think the way to develop intuition for these other markets that might matter more than where you park in Costco is, all right, in which cases is the going for gold worth the risk? Is the slot almost entirely full? And if you miss the spot, then somebody's going to swoop in and take it. In cases like that, maybe you do settle for silver. When I'm fighting for my French laundry reservation, if I don't take the 430 slot immediately, somebody else is going to take it and it's going to be gone. So maybe that's a case where the same way I would take the parking spot, I take the 430 reservation.
42:33Sometimes I'm with my kids and I don't want to have to deal with them as I'm bringing all this stuff back from Costco and I don't want to have to walk with them through a parking lot where people are turning around. Then it's worth going for gold because the gains that I might get from getting a spot right up front really trump whatever risk I have of having to circle the law and find another spot. And so that kind of gives you some intuition for like, when is it really worth going for it? And when should you play it safe? The other market we haven't talked as much about is lotteries. And we do encounter these as well.
43:02And I know growing up, my dad was in a season ticket lottery way before I was even old enough to really go and enjoy the games. But he knew at some point, like, you just got to keep trying. So walk us through the strategy around gaming lotteries? Lotteries are the one where we think it's the most based on chance and that you don't have any kind of additional way to tilt the scales in your favor. But it turns out, depending on the lottery rules, you often can make yourself lucky in those lotteries. So one is the obvious one, which is just enter more times. And Johnny's laughing, but it's like, sometimes there are ways to enter that are not necessarily obvious, right?
43:40You're trying to get season tickets. You're entering yourself in the lottery for season tickets. But if you have a friend who would do that for you, who might win the lottery to season tickets, then you pay them for the tickets and they give them to you or your partner. Or once you're old enough to qualify, then you can also enter along with your dad. All of a sudden, we're getting more bites at the apple. And this happens with ticket lotteries for rush tickets for theater shows where you can get two tickets to the show if you win. It used to be how to be at the theater before the show to get the tickets.
44:14And then if I went with my buddy, then we could both enter for two tickets. And basically, only one of us needs to win to go together. Now, if you wanted to, you could enter online and you only have to go down to the theater if you win the tickets. So if I really want to see something and I can get my friends to all enter for me, they'll have to show up and show their credit card and show that they were the winner. But the rules might allow them to just hand me the tickets after they pick them up. And so those kinds of tricks can be helpful. And that strategy works for other kind of higher stakes lotteries as well.
44:44So there's a, the U.S. has a lottery historically, they'll get a visa to come to the U.S. And your whole family gets to come to the U.S. if you win this diversity visa lottery. And you and your partner can both enter and hope to make it to the U.S. And you're just increasing your chances as you enter more times. And then other lotteries, and this kind of gets more complicated and more interesting as well, basically reward prior losers. So this comes up a lot with hunting tags for big game hunting, where there are a lot of recreational hunters who want to hunt certain animals. There's only so many that the ecologists have said, we can kill in any given hunting season.
45:24And so again, much more demand and supply of these hunting tags have the right to go out and hunt for that animal. And so what do they do? They do lotteries, but they want folks who've been unlucky in the past to be lucky and to have a better shot in the future. They want to kind of spread the benefits of these exciting hunts out across many people over people's lifetimes. And so if you've lost, say, nine years in a row, some states, when you enter this year, will give you 10 entries instead of once. You have 10 times the likelihood of winning this year. Some go even further. There was one state that switched, South Dakota switched from giving you those, the 10 entries to giving you, it was a squared, no, it was a cubed system.
46:10So they gave you, it would be instead of 10 entries, you get 10 cubed, you get a thousand entries for this year, as opposed to a new person. And so in those kinds of lotteries that were word losing in the past, then you want to start entering as soon as possible. As soon as you might want to hunt, you should be entering the lottery every year. And some of the states allow you to enter a lottery and say, I actually can't hunt this year. I just want to enter and lose so that I can build up my chances for next year. So you can say, there's a year I just want to enter and lose. But that's the strategy to play in lotteries that remember who has won and who has lost in the past.
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47:23Bundling. Just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state. In a lot of these lotteries around tickets, there's a resale value too. So even if you might not be ready, you win, you can still cover your losses by not going to the game and selling them, flipping them. This is where the hidden markets that I've talked about, you see the kind of traditional economics argument starting to work its way back in because the Taylor Swift tickets or these other live event tickets, when they're allocated in these hidden markets at a price that's too low for the market to clear, then you get speculators.
48:07You get ticket brokers who send their bots in to buy the tickets. If it's a first-come, first-served race and you're racing against a bot, no matter how fast you click, the bot, the computerized program, is going to beat you at getting those tickets. And then they're going to turn around and sell them at whatever high price they think they can get. So the speculators are going to enter and make it look more like a visible market. And so if you are fine paying a high price for those tickets, then you might be fine with that because there you are being able to get the ticket to the show. But if you are thinking about this from the perspective of designing a market, you don't love that because the venue, the baseball stadium or Taylor Swift for her Aeros tour, or I talk about Hamilton tickets, the tickets to see that show, the producers didn't want to set the high prices.
49:00They wanted to set lower prices. spread the benefits of seeing that live event more broadly across the potential fan base. They didn't want it to just be something the rich could do. And so then the speculators and their bots become a problem that you are trying to solve for. And you as a market participant, you can't solve it. You can't. If you want to see the show and pay a price that's high to get the ticket, that's going to be what you have to do. But as a market designer looking in at these markets, man, we got to fix this. Not every birthday that my wife celebrates is a milestone one where we might spring for French laundry reservations.
49:35But if for some of the times for a birthday, we'll go to the US Open. And I recently bought tickets to the US Open right when they were released. It was like the pre-sale period. I went in and I went maybe within 20 minutes of the sale starting. And there were some tickets that were that I could get at face value. But already the majority of tickets that were being sold for the US Open for this particular night were being resold. People had bought them within the first 20 minutes and then were flipping them immediately. These are not people who bought the tickets to see tennis and then realized they couldn't go.
50:09They bought them to resell them. And I don't think that's what we want our ticket markets to be like. So we have to think about how to fix that and push the speculators out. Sometimes there's hidden markets within our relationship. And this is a bit more of a personal question for me with mental load around chores and a newborn, how do we actually work through this hidden market to save our relationship? All right. Congratulations on the newborn. Yeah. So this is back to you as a market designer. This is actually a nice one because you are both a market designer deciding how to allocate chores and your market participant cooperatively.
50:44And your market participant because you have to do the chores, some subset. So here's my advice for folks in this situation, it worked for me and hopefully it'll work for you all as well. I talk a lot about in the book about efficiency, equity as being two of the things that we really care about. And for a lot of household chores, there are a few kind of component pieces. And I'm stealing this framework I'm about to tell you about from an author named Eve Rotsky and other folks have written about this. But a task requires conception. You have to understand understand that the task is happening.
51:18As you have to conceive of the task, you have to plan for the task, and then you have to execute the task. And a lot of times in our households, we try to split up those pieces. So like my wife might realize that something has to get done, and then she might plan for it to happen, but then she might ask me to actually go and do it. So she's going to realize we need certain something from the grocery store, she's going to call and make the order, but I'm going to go and pick it up. And so that will sometimes work. and for certain tasks, you are stuck in that situation. But for the most part, it is more efficient if one person is doing the conception, planning and execution of a task all the time.
51:57So if we're thinking about kids afterschool activities, so this is something that I deal with personally a lot, it is much easier if it is just, say, me who is trying to think, okay, what are we going to have them do each day? What are their afterschool classes going to be? Who's going to pick them up? Just planning that. And so I know all of the pieces that have to get moved around. If my wife and I both tried to do that task, we would both be worrying about it all the time. We'd both be trying to make plans for who's going to pick up who when. And that would be inefficient. And so a lot of, I think this comes up a lot in relationships where, again, this is, I'm generalizing now, but you hear a lot of times in heterosexual relationships, the mom will complain that the dad is not helping with the stuff around the house.
52:43And the dad will say, I am, I'm doing a lot of stuff. Look at all the stuff I'm doing. And what is happening is that one of the issues is they're not realizing that they might be duplicating. Certainly the moms on average do a lot more of this stuff. So that is a data back setup. But the dads might not realize, like, they're also doing conception and planning of tasks. They're doing some of the execution. But if they just split the tasks wholesale, then it would be much more efficient. You wouldn't be duplicating efforts on conception and planning, which are hidden, which are happening in people's minds, usually.
53:16And then the second additional piece, the way to think of that as being how to make it efficient to not duplicate efforts. but the way to make it equitable is a concept from economics that's called envy freeness so this is how my wife and i split chores in the house so we think about the whole doing the conception planning and execution the whole thing of a task and then we divide tasks and we keep deciding who should do what until we get to a point where we look at what each other one is doing and we say man i would much rather be doing my tasks than be doing your tasks like I do not envy what you have to do.
53:55Because for me, my wife wakes up much earlier than I do. I'm a kind of night owl. She's an early bird. So a lot of the tasks that deal with the morning, getting the kids ready for school, making breakfast, packing their backpacks, she handles that because then I don't have to worry about it. And I really appreciate it. And as a night owl, I can do stuff at night, get the kids down for bed, prep anything that needs to be prepped for the evening, for the next day. And then that way, we are both doing a set of stuff that the other one appreciates. And we know that we are splitting it up evenly. We don't present the other one because we think they're doing less.
54:33We appreciate that what they're doing is something we do not want to take on. What do you say to the guy whose wife is better at the planning and the strategizing? If you rely only on who's better at a particular task, then you have a problem if your wife is better than you at everything, which is what a lot of men will say, to not have to do anything around the house. And I think it behooves people to think about what their strengths actually are. And I think people are better at planning and execution than they give themselves credit for. If they are successful in other parts of their life, then they are planning and executing on certain tasks.
55:13And so they should think about, all right, what are the things that in the house I actually could plan and execute in a way that makes the work in the household easier for us because we're being more efficient, but also makes it more equitable. And again, some households are structured differently. If your partner, if you work outside of the home and your partner works inside the home, then that could satisfy envy-freeness to say, I'm going to do all the going out and earning money, and you're going to do all the household production, and I don't envy you and you don't envy me. like that relationship structure satisfies envy freeness that's fine but if both folks are going out and working outside the home probably when they come back they should be figuring out a way to share those tasks even if look my wife's a better cook than me so when it's cooking it's it always is her but i have to then pick up the slack and some other area that we might be equally good at and it's going to be my turn to do that as we wrap here what's a market that you're currently in your own life trying to crack the code on?
56:18Oh, that's a good one. No, so the writing of the book has gotten me to think carefully about the markets in my own life. So now I'm looking at these markets that a lot of them cover in the book that I am very eager to fix as an outsider. And so like the ticket one, the resale ticket one is really getting under my skin. And I really want to figure out how can we set up the ways that we sell live event tickets where we don't give billions of dollars a year to people who are not adding any value and are just coming in and buying tickets that were supposed to be sold to us for$60 and then selling them back to us for$160.
56:58And by the way, Ticketmaster is taking 30 % of the$160 on the sale. So they're not necessarily going to help on their own, right? So it's like, we need to figure out how to better design that market. And that's one of them, but that's the one that right now maybe because - I don't think they'll be too thrilled with you tinkering with it. I know they have a lot of profits at stake. It is, we are the fans and we should. They don't care. So the goal is finding someone who does, and maybe it's regulation. It's make a lot of enemies on a single podcast. But no, I don't. I think that it is in our interests.
57:36If we want to make sure that the fans get to see these live events, that we figure out how to make it more equitable and not let the ticket brokers take so much of the surplus. Yeah, that's the unfortunate part that the ticket sellers can double dip and essentially make money on both transactions, the initial and then the resale. Even in the 70s, before Ticketmaster, headlining acts would buy the first several rows of their management would of their own shows so they could, the show will be sold out and they could sell those tickets and make double, triple the price on it. There's always going to be somebody with their hands in the cookie jar.
58:17Look, if I can imagine that, I have a friend from graduate school who wrote one of his dissertation work on this. Sometimes it's, you want to be the one to charge the high prices, but you want to make it look like somebody else is doing it. But it's very costly to involve all these third parties. If you think the first few rows should be very expensive, then you can sell that at the high prices. And that's fine. If the managers are doing it to line their own pockets rather than the artists, then of course they're acting just like the scalpers are. But it's something that you want to think about whether there is a solution for.
58:50I'm not satisfied with saying it's just the way it is. I'm going to give up. I want to push on it. There's other ways. For myself, I've understood that market my whole life being a musician. And of course, AJ will tell you, I don't go to big shows. In fact, your new favorite band, your new favorite Taylor Swift, is playing at the coffee shop down the street for$5. Go support her. You'll be blown away and she's going to hang out with you. She's going to sign all your stuff and she's going to put you on the guest list for next time. You just gave us a way to get lucky by design. You just gave us a hint that's not in the book as a way to break the live event code.
59:30Thank you for sharing all these great strategies. Where can our audience find out more about your work in the book? Yeah, so the book is called Lucky by Design, the hidden economics you need to get more of what you want. They can go to my website, judbkessler.com or just search for Lucky by Design. Yeah, I'm excited for folks to check it out. Thank you for joining us. Thanks for having me. Thank you, Jed.
1:00:02And now I'd like to showcase one of our X-Factor Accelerator members. Take it away, Michael. Hi, my name is Michael and I'm an accountant for an insurance company. Before the X-Factor Accelerator, I struggled to build and maintain close connections in my social circle because I wasn't the best at sharing thoughts and feelings with others. The reason I joined the X-Factor Accelerator is to improve my overall social confidence with my family, friends, colleagues, new acquaintances, and in my social and romantic life. My favorite thing about the X Factor Accelerator is that it helped me overcome my fear and anxiety when interacting at large social events so that I can now confidently approach others and make new connections with ease.
1:00:46What I'm looking forward to now is using the skills, techniques, and experience I've learned to create long-lasting and more meaningful relationships with the people I care about most in life. Thank you, Michael. It was an honor and a pleasure working with you too. And good luck to you and all of your future endeavors. If you've gotten value out of this or any of our podcasts, head on over to your favorite podcast player and rate and review the show. It will mean the world to us and it helps others find the show. Until next week, go out there, have an amazing week, have an amazing weekend, and we'll see you soon.
1:01:21Yeah, I remember you. You were the bad boy. You threw your life away. Like you were just a toy. And you solved the world. You're a song of a tragedy. Cause you had your taste of black on the yesterday. Yeah, but I remember you. Oh yeah, I remember you You remember me
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From the publisher
Why do some people always seem “lucky” while others miss out? In this episode, AJ and Johnny sit down with Wharton economics professor Judd Kessler, author of Lucky by Design, to reveal the hidden rules that govern life’s most important markets—from dating to job hunting to Taylor Swift tickets. These “choose me” markets don’t run on money alone; they run on signals, timing, and strategy.
You’ll learn why signaling interest often beats being perfect, how “settling for silver” can land you gold, and why gaming the system sometimes backfires. Judd breaks down strategies for college admissions, career opportunities, dating apps, and even Costco parking lots. Whether you’re chasing a dream job, trying to stand out in dating, or just fighting bots for concert tickets, this conversation shows you how to design your own luck.
What to Listen For
[00:01:04] What it means to be “lucky by design” and why hidden markets matter
[00:02:11] Taylor Swift tickets, hot restaurants, and how hidden rules decide who wins
[00:05:15] “Choose me” markets—jobs, schools, and dating—where the other side decides
[00:07:29] The two signals that matter most: competence and real interest
[00:10:22] Johnny’s story of breaking into bands through excitement and persistence
[00:13:24] Why idiosyncratic (weird) signals often work better than safe ones
[00:19:39] Costly signals—when to use them, and when they’re wasted
[00:21:41] The strategy of “settling for silver” to actually win
[00:27:05] When gaming the system works—and when it backfires
[00:29:53] Designing your inbox and attention like a market
[00:35:20] How a strong plan B lets you go for gold
[00:37:38] Costco parking lots as the perfect example of hidden strategy
[00:47:17] Hidden markets at home: sharing chores and mental load with equity
[00:55:05] Why ticket resale markets frustrate Judd—and how he wants to fix them
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Episode resources:
Judd B. Kessler
Lucky By Design
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