NEW YORK ¨C Presidents, generals, dictators and ordinary people take big risks when they have nothing to lose, similar to a quarterback in American football throwing a so-called Hail Mary pass. But the consequences of such a strategy in politics, war and business are usually more serious than the outcome of a football game.
In the Middle East, for example, it has produced continuous conflict because the warring parties feel as though they have nothing to lose.
The brokerage firm TD Ameritrade¡¯s annual collegiate stock-market contest illustrates the incentives when there is ¡°nothing to lose.¡± Each team begins with a paper allocation of $500,000, and a final cash prize goes to the team whose portfolio earned the highest profit in the space of a month. In 2015, students from Southeast Missouri State University beat 475 other entrants by turning $500,000 into $1.3 million. None of the winning students knew anything about finance, so how did they do it? According to the team captain, ¡°We had nothing to lose. If we end up losing all $500,000, oh well. We basically just decided to be as risky as possible.¡±
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