Payoffs

Payoffs (What)

A payoff is the rewards minus the drawbacks in a holistic sense that arise from ethical actions.

Examples

  1. The net benefits a couple gains from taking a vacation.
  2. The net rewards a person anticipates from completing a project, balanced against the costs, time, hassles, and other factors involved.
  3. The net benefits of earning a college degree.
  4. The net rewards you anticipate gaining from learning subject X.

Types of Payoffs

Breakdown (Main Ideas)

Here are the main ideas in the definition of payoffs.

Ethical Actions

These are actions that align with universal moral principles. I assert that in the long term, ethical actions are better than unethical actions in spite of the potential short-term rewards of being unethical. I teach others to follow their ethics, especially when this is really hard to do.

Payoff (Game Theory)

In the mathematical subject called game theory, payoff refers to net financial rewards. A payoff can be positive (make money) or negative (lose money). Here, I am generalizing the concept of “payoffs” as it is used in game theory.

Positive Payoff

A positive payoff is when rewards > actions in a holistic sense. Typically, we seek rewards >> payoffs as in a 5x payoff which means 5 units of reward for each unit of drawback.

Negative Payoff

A negative payoff is when rewards < actions in a holistic sense.

Payoff Scale

Arbitrarily, I define a payoff scale that spans from -10 to +10.

Reward

A reward is anything that tends to cause an actor (person, group, animal) to want to repeat an action. Here are some examples: satisfaction, enjoyment, feeling good, social connections, great results, and external rewards (social status, social power, financial rewards, and so on.)

Drawback

A drawback is anything that tends to cause an actor to not want to take an action. Here are some examples: fear, pain, frustration, complexity, confusion, hatred, effort, cost, required time, required resources, loss of social status, loss of social power, being ostracized, and so on.

Rationale for Payoffs

Here are some reasons why being skilled with estimated future payoffs and determining payoffs from past actions is worthwhile.

  1. Provides a rule for life (maximize payoffs) that is really just saying “do what matters the most in life.”

  2. Getting a high payoff is satisfying.

  3. Generalizing to include all kinds of rewards and drawbacks allows one to make choices based on what matters the most, not just on financial returns.

  4. Allows people and groups to compare options in decision-making.

  5. After things have been completed, you can look back and see if you got the payoff you anticipated.

Concerns

  1. Not always easy to quantify rewards and drawbacks.
  2. Not always easy to anticipate the rewards and drawbacks.

Payoffs (How To)

  1. Seek to maximize your payoffs

    1. Get the most rewards and the fewest drawbacks.

  2. Pick a scale that works for you.

  3. Get used to thinking with payoffs.

Relationships

  1. Payoff is typically subjective which means that the payoff (anticipated or actual) for an actor (person or group) depends on their values (what matters the most to them).

  2. The concept of payoff is used in Game Theory, which is a branch of mathematics.

  3. In economics, a util is a theoretical unit of measurement used to quantify utility, which represents the satisfaction or pleasure that an individual derives from consuming goods or services.