The $60,000 Diet

Ray's Video Update, 12/8/2008

The $60k Diet and Prisoner's Dilemma

Economist Alex Tabarrok of George Mason University -- a former colleague of mine at the Independent Institute in California -- theorizes that the wager could create an incentive for Ted and I to conspire NOT to lose weight.

Now this does raise an interesting prisoner's dilemma problem, with Ted and Ray as the prisoners.  If the prisoners can agree to "cooperate" they could both eat and lose neither weight nor money.  But with $1000 per pound at stake can Ray count on Ted not to cheat on his diet by dieting (and vice-versa)?  But in this context is cooperation really cooperation or is it just joint self-sabotage?  A true dilemma.  But I have a solution.

I stand ready to be Leviathan!  As a service to my friends, I propose that Ted and Ray pay me $1000 for every pound less than 60 that they fail to lose.  Hell, out of the goodness of my heart, I will pay each of them $500 upfront for the honor of being Leviathan.  Now that is an incentive! 

$60,000 Diet in the Washington City Paper

Arin Greenwood writes:

My friend Ray made a $60,000 bet with his friend Ted that he’d lose 60 pounds in nine months. Ted made the same bet back. At the end of nine months, Ray and Ted have to pay each other $1,000 per pound each has lost. Ray claims he’s hoping no money changes hands, but I hear he’s secretly putting butter in his friend’s food.

Ray, who has lost 3.6 pounds on Day 1, is keeping a video diary of his weight lo$$ adventures, which you can watch on YouTube if you are so inclined, and if you are so inclined and you see Ray Out and About and Eating Cake you have permission to steal his wallet.

Ray's First Video Update, 12/1/2008

The Set Up

The $60,000 diet challenge commenced Dec. 1, 2008 with a simple wager. Ted Frank and I both wish to lose 60 pounds. We both think nine months is a reasonable time frame in which to accomplish that goal. And we're each big stakes that we can, and by implication, that the other of us cannot.

The stakes are these: For each pound I lose, Ted owes me $1,000. For each pound Ted loses, I owe him $1,000. Our respective liabilities are capped at $60,000, so neither of us could run up the score by losing more than 60, or end up further in the hole should we actually gain weight over the period. 

Extreme? Yes. But we find the stakes a useful incentive. As Ted put it in designing the challenge:

The Frank Plan features a combination of elements of the tontine; the Stephen King short story "Quitters, Inc."; and the Karlan/Ayres program you might have seen in some economics blogs or Slate.

In "Quitters, Inc.," a mafioso gets people to quit smoking with a 98% success rate by extortion and credible threats of harm.  ("But even the unregenerate two percent never smoke again. We guarantee it.")  Too violent, illegal in most states.

Under Karlan/Ayres, which they set up at stickK.com, one commits oneself to do X and a financial penalty for failing to reach X.  I don't like this: there's no upside, their contracts tend to be binary and it's too hard to structure gradated contracts.  The Frank Plan solves each of these problems.

So, here are the challengers:

1. Ted Frank, starting weight of 279, goal weight after nine months of 219
2. Ray Lehmann, starting weight of 265.8, goal weight after nine months of 205.8