Freerolls

19 Pages Posted: 27 Jul 2020 Last revised: 5 Aug 2020

See all articles by Annie Duke

Annie Duke

affiliation not provided to SSRN

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Date Written: July 22, 2020

Abstract

When policymakers focus on costs and benefits, they often find that hard questions become easy – as, for example, when the benefits clearly exceed the costs, or when the costs clearly exceed the benefits. In some cases, however, benefits or costs are difficult to quantify, perhaps because of limitations in scientific knowledge. In extreme cases, policymakers are proceeding in circumstances of uncertainty rather than risk, in the sense that they cannot assign probabilities to various outcomes. We suggest that in difficult cases in which important information is absent, it is useful for policymakers to consider a concept from poker: “freerolls.” A freeroll exists when choosers can lose nothing from selecting an option but stand to gain something (whose magnitude may itself be unknown). In some cases, people display “freeroll neglect.” In terms of social justice, John Rawls’ defense of the difference principle is grounded in the idea that behind the veil of ignorance, choosers have a freeroll. In terms of regulatory policy, one of the most promising defenses of the Precautionary Principle sees it as a kind of freeroll. Some responses to climate change, pandemics, and financial crises can be seen as near-freerolls. Freerolls and near-freerolls must be distinguished from cases involving cumulatively high costs and also from faux freerolls, which can be found when the costs of an option are real and significant, but not visible. “Binds” are the mirror image of freerolls; they involve options from which people are guaranteed to lose something (of uncertain magnitude). Some regulatory options are binds, and there are faux binds as well.

Suggested Citation

Duke, Annie and Sunstein, Cass R., Freerolls (July 22, 2020). Available at SSRN: https://ssrn.com/abstract=3658663 or http://dx.doi.org/10.2139/ssrn.3658663

Annie Duke

affiliation not provided to SSRN

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

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Areeda Hall 225
Cambridge, MA 02138
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Harvard University - Harvard Kennedy School (HKS) ( email )

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Cambridge, MA 02138
United States

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