Game theory explains why smart people don’t win. Being smart and working harder doesn’t fix money pr

Smart people struggle to win.

They overanalyze and overthink everything. Perhaps you’ve noticed? This means they often struggle financially and can’t as easily reach their version of financial freedom.

To make things worse, smart people will often try and work harder to financially get ahead. This only compounds their losses even further. It’s sad to watch as someone that’s worked with a lot of smart people online over the last 12 years.

But it doesn’t have to be this way.

Game theory explains why this problem happens. And once you understand the power of game theory, you will never think or act the same again (regardless of your IQ).

Here’s how to use game theory so you can win more in life.

Why smart people pay $40 to win a $1 bill

Economist Martin Shubik ran a weird experiment in 1971.

He decided to auction off a $1 bill. Badass. There was one rule: the highest bidder wins the dollar, but the second-highest bidder still has to pay their final bid, and gets nothing for it.

The result is fascinating.

The auction starts with some clever cat bidding 5 cents (a nickel). The next genius will bid 10 cents. Now they’re in first place. But the moment you’re in second place, the math changes underneath you. You’re no longer bidding to win a dollar. You’re bidding to avoid paying for nothing.

The logical step is to bid higher to regain first place. The other person does this too. Each increase in bid is rational. Each one is a response to a real, immediate loss.

Martin watched smart people pay as much as $40 to own a $1 bill.

These people weren’t dumb. They were simply sucked into a game and doing the sensible thing until they ended up in trouble.

Those who played this game and worked the hardest, refused to lose, played the longest, and placed the most aggressive bids lost the most money. They were playing a losing game and no matter how smart they were, there was no way out.

Professor Gordon Tullock gave this a name: rent-seeking.

It’s when people pour real resources — time, money, effort, years — into competing for a prize, and the total spent chasing it ends up larger than the prize itself. Everyone is working hard. Everyone is being rational.

And together they lose more than they can ever win.

The $1 bill auction isn't a story about lazy people losing to hard workers. It's the reverse. The harder you try, the more you lose. And once you notice this pattern, you start seeing it in a lot of places where money is on the line.

In every one of these, working harder isn't your advantage. It's the very thing the game feeds on. This is why smart, hardworking people stay stuck, and it isn’t a paradox once you say it plainly:

Effort spent inside a rigged game gets absorbed by the game.

You can be the best bidder in the dollar auction. Being the best bidder is exactly how you lose $40. What protects your money isn’t doing the same thing everyone else does, only harder. It’s a completely different skill: looking at a game, seeing how it works before you’re pulled in, and walking away from it.

That’s the uncomfortable reframe.

We’re trained to admire the smart person who tries harder. But in a rigged game, trying harder is a sign that you haven’t understood the rules. The high-value, rarer move is to see the auctioneer smiling, do the math on where this ends, and keep your hand down.

Working harder was never going to fix it. The $1 bill was never the point. You were.

This auction story also explains most business opportunities and traditional jobs. It’s why the famous line “Even if you win the rat race, you’re still a rat” is so damn good. Understand the game you’re playing and the incentives before you ever play. Or you’ll end up a broke rat chasing cheese on a hook like a dumb-dumb.

Play stupid games, win stupid prizes.

The man who watched traffic and won a Nobel Prize for it

William Vickrey won the 1996 Nobel Prize in Economics.

He died three days after it was announced.

He’d spent much of his career on a problem so ordinary and boring that most people never think of it as a problem at all: the traffic jam.

William’s insight was that nobody in a traffic jam is doing anything wrong. Every driver on the road at 8:15am made a sensible decision. They need to be at work at 9.

The roads are public and free. Leaving at 8:15 is the rational choice given everyone’s constraints. And precisely because it’s the rational choice, everyone makes it. The result is a jam that no single one of them chose and no single one of them can escape.

This is the part worth deeply thinking about. The jam is not a failure of effort. It’s the sum of everyone’s effort, pointed in the same sensible direction at the same sensible time.

Trying to beat the traffic jam full of office workers is where it gets interesting.

You leave earlier. Smart. For a while it works — until enough other people reason the same way, and the peak simply shifts earlier to meet you. You learn the back routes, the shortcuts, the timing of the lights.

So does everyone with a navigation app, and the shortcuts fill in until they’re as slow as the road you left.

You drive more aggressively, change lanes, push. You arrive at the same time, more tired. Every move you make to beat the traffic gets copied by everyone else making the same move, and the jam quietly reforms around you. You cannot out-effort a jam, because the jam is madeof effort exactly like yours (so is the corporate world).

William’s actual solution wasn’t to tell drivers to try harder or wake up earlier. That’d be dumb. He understood that no amount of individual cleverness could touch the problem, because the problem lived in the structure, not the drivers.

His solution: congestion pricing.

Change what it costs to drive at the peak, and you change the game everyone is playing. Alter the structure and the behavior follows. Tell people to try harder and nothing changes.

It took decades for cities to listen. For most of his life, the roads he studied were proof of a fix that no one would use.

Most financial advice is the equivalent of telling someone to leave for work earlier.

Cut the coffee. Hustle more. Pick up the side gig. Optimize, discipline, grind. And some of it helps a little, the way leaving 10 minutes early helps. Until the game takes it back.

Effort spent inside a rigged game gets absorbed by the game.

The driver who beats the traffic isn’t the one who tries hardest. It’s the one who notices the jam is a game with rules — and asks whether there’s a different road, a different hour, a different job, a different game entirely, where the same effort isn’t immediately handed back to the structure that produced the jam.

The high-value skill was never driving harder. It was seeing the road and broader game you’re playing for what it is.

Money is the ultimate hidden game

Game theory proves that zooming out is where all the wisdom lies.

Let me give you a practical example: money. Money at its core is a product. It’s a way to divide up labor, time, and resources.

Yet most people never analyze what money is – how it’s created, where it comes from, and how a few people exploit the game of money.

Years ago I found a glitch in the Matrix that is money.

I learned about money printing, and wanted to apply game theory to it to make more money. I won’t bore you here with it, but the core idea is that modern money is the same as money in a monopoly game. When the bank in monopoly runs out of money the players just trade fake IOU slips. Same applies in real life.

Money is just ones and zeroes on a screen and a few powerful people and organisations have the power to create money from nothing. Unless you understand this game, the money you earn loses its value like a melting ice cube.

Around this time I heard an expert say, “The word inflation is just code for how much your money has been devalued by every year.”

This money game broke my brain.

I realized just like trying to drive faster to work doesn’t work, making more money wasn’t enough either. I had to beat the rate at which my money was being devalued.

It made me realize the price of everything is distorted. Did my house go up by $200K in 2 years, or did more artificial money get created and make it look like it did?

Smart people start to fix their money problems by first understanding how the game of money works, and how money is devalued.

This is the #1 factor that runs every game in life

Incentives run the world.

See the incentive, and you can reliably predict the outcome.

- Lawyers always want another revision (paid $500/hr)

- Realtors always want to close a sub-par deal (2% fee means a $20,000 more for you isn't worth it for them)

- Wealth Managers will always push for the structure that pays them the most - usually more raw dollars (they get paid on AUM + additional trade fees, not results)

"Never ask a barber if you need a haircut" –Warren Buffett

– Andrew Wilkinson

Most smart people spend their entire life asking people for advice who have an incentive to offer a biased answer that isn’t in their best interests. It’s why you need to 1) understand a person’s incentive before asking for advice 2) do your own experiments 3) fail and get rejected yourself.

Position yourself cleverly in favor of the game’s existing interests

I’ve been writing online for 12 years. And I’ve seen people get f*cked regularly by the game. Let me give you an example.

Years ago I was writing on a website called Medium dot com. They charged readers a $5 a month subscription. This money was divided up amongst writers on the website based on content views.

I figured out the game early on. I wrote viral content. I got that content shared everywhere I could. I got major Medium publications to publish my content to their huge audiences instead of relying on my own.

And at the peak I earned $70K USD a month.

To position myself cleverly in the game, I also made friends with Medium staff. I supported their causes, had calls with them, and kissed ass like the butt licker I was.

This made things even better. I got to look inside the platform’s game and learn how the game creators were thinking. I also saw major changes before anyone else.

I thought I was f*cking Einstein.

Right at the peak of the platform, I got nervous. I noticed a shift. The staff’s egos were getting out of control. They publicly announced their number one company goal wasn’t revenue, but spreading extremist social justice issues.

I also noticed them hiring a bunch of old world media people who applied tactics that didn’t work in the online space. They even launched New York Times-style publications that failed.

The final straw was when I saw the senior leaders telling writers how to write.

They basically screamed at writers and said “You’re all stupid and we know what’s best for you. Trust us.”

Because I studied game theory, I saw through their bullsh*t. I saw the rules of the game they had created and who they would benefit. I saw them transition from being a business to some weird, esoteric, high brow, high-IQ-low-pay magazine.

They even had the audacity to try and trash this platform I’m writing on now.

I got out of there real fast. I joined this platform in 2021 to hedge my bets. People told me I was crazy, but I knew the rules of game theory would eventually apply.

And they did.

The platform became completely irrelevant. Everyone from Gary Vee to Tim Ferriss stopped publishing there. I don’t blame Medium for it because they did the best they could. But they ignored the people who built the platform and paid dearly for it.

Tragic.

I went on to leave Medium and make millions of dollars elsewhere (not to brag). My audience exploded and the little success I had on Medium became laughable compared to the broader opportunity I unlocked by playing new games.

An understanding of game theory can make or break your life.

If you understand the games you’re playing and how the incentives work, you can be at the forefront of every new innovation and opportunity without being that smart. This is also how you get wealthier too.

You don't win a game by mastering the visible rules, you win by understanding the incentives driving the players – @alexeixbt

The game was never going to be fair. Stop waiting.

I see this with musicians and actors all the time.

They hope the career game they’re playing will eventually change and they won’t need to beg gatekeepers for jobs or borrow audiences. But hope is a dumb strategy. It’s been decades and both games are still the same.

Here’s an extraordinary way to think about life games:

Game theory explains why working harder inside a broken system is the worst response to that system.

Because a system is never truly broken. It's just producing exactly the outcomes its own incentive structures were designed to produce, whether intentional or not.Working harder inside this system increases your output in the payoff matrix, but it simply won't change the actual structure of the system's matrix.

Thus, the correct response is not more effort. Instead, you must aim to identify whose interests the current structure serves and position yourself in favor of those interests rather than against them.

Change the game, or play the game that is actually being played. Either way, you must stop optimizing for the game you wish it to be and start acting realistically – @incentivising

Smart people who want to publish books are a great example.

They want to build a career where all they do is sit and write, publish a book, get praise, never talk to a customer, have people look at their perfectly shaped butt, and bank millions of dollars. The book game hasn’t worked like this for years (if ever).

Yet authors still hope they can outsmart the model, instead of just building their own audience and realizing a $20 book is the sh*ttest way in history to monetize your knowledge, experience, IP, and skills.

I’d rather get f*cked by a duck than sell books.

A stupid game is still a stupid game no matter how much you wish it wasn’t, or spend time around those one-in-a-million folks who won a lottery game that is near-impossible to copy.

There are many games in life you can play, but it’s a good idea to apply statistics to it. Because the game might be winnable, but it could also have a one-in-a-billion chance of success, which means there’s likely a better game to play instead.

Master game theory and you automatically become a high performer.

Being smarter won’t make you more successful in life.

Working harder or putting in more effort won’t work either. High performers that get all the rewards all master game theory. They learn the rules of the game, study the incentives, then eventually rewrite the rules once they’re masters.

You can’t beat these people. It’s better to copy them and learn game theory.

Here’s how:

1. Treat your life like a bizarre video game

To remind myself, I have a deconstructed, framed, yellow, 1989 Gameboy on my wall.

I realized at an early age that the most successful people I admired all had history with playing computer games like I did. They played PC games like Warcraft, or they played one too many games on Nintendo or Playstation.

Our parents told us playing video games was useless.

But for many of us, it’s where we accidentally learned to master the art of game theory. And that’s now one of the big reasons we’ve succeeded in life. Games teach systems-thinking, feedback loops, and resource management.

If you’ve never been a gamer, it’s probably time to start. Regardless…

Every skill, goal, and career is a real life video game. Start acting like it. Choose your avatar. Build a personal brand. Acquire some monetizable skills. Make friends with players of the same game. Set goals. Have daily KPIs. And have fun playing.

Remember: if someone has won the game you want to play before, you can reverse-engineer most of what they did and produce similar results.

2. See patterns others don’t

A key part of mastering any game is seeing patterns. This is called pattern recognition.

When you see the patterns you can see the hidden game being played below the surface that most people aren’t conscious of – like money printing mentioned earlier.

There is a downside, though, although I think it’s a good thing.

Dr Julie Garner explains: “Pattern Recognition is also the form of intelligence that causes the most stress. You will see things that others do not. You'll feel crazy. Things will be *so obvious* to you, and others will just deny it.”

This skill can be harnessed so it doesn’t make you go insane in the brain.

The way I deal with it is to not try and expect other people to understand or care about the patterns I’ve been able to identify in society.

I’m okay with just knowing and exploiting them for myself. If others want to know, then I will share. But it’s not an expectation.

One pattern I noticed was that when I turned 40 I saw the difference between those who took risks and those who didn’t.

I found it terrifying.

I wanted to act like a disciple of God and spread my gospel. But I didn’t because I realized no one cared. Instead, I simply made sure I took calculated risks every year, so I could grow, and avoid a mid-life crisis or regrets.

3. Do this instead of working harder

Game theory proves working harder inside the wrong game doesn’t work.

Instead, use game theory to start winning at a game and build leverage. Leverage is when you get more results from the same effort without you needing to invest more resources. Here are some examples of leverage:

Leverage = Modern Freedom

Apply leverage to whatever game you want to win at in life.

4. Study the roots of game theory

To truly master game theory, you must study the foundation.

It won’t take you long either. Read this book from the godfather of game theory John von Neumann: “Theory of Games and Economic Behavior.” Then go watch the movie “A Beautiful Mind” about the other game theory legend John Nash.

Your life will never be the same again.

5. Pick games you can actually win — and skip the rest.

Smart people don’t do this.

They pick games without even understanding if they could win at all. These games usually have bad odds of success too.

I like to choose games I’ve seen other people win.

I don’t want to be the first person to create the iPhone revolution because I know the odds I’m as good as Apple and Steve Jobs are highly unlikely.

Before playing any game, study the people who’ve already won then, if you can, ask them: “Was winning this game worth it? Did it make you happy?”

I did this earlier in my career with people who climbed to the top of the corporate ladder and became CEOs, CFOs, GMs, etc.

Their answers still haunt me.

When I questioned them hard enough, every single one of them admitted it didn’t really make them happier and they missed spending time with their families.

Turns out sitting in back-to-back meetings and having very little time and control of your calendar is a nightmare.

6. Learn which games to walk away from

(This is the rare skill).

I walked away from the Medium game. Shortly after I walked away from the game of climbing the corporate ladder. I learned the hard lesson by playing both games for a few years to try them out for myself. I didn’t just listen to second-hand advice.

Through experience I saw that asking for permission and having your income be controlled by total strangers made zero sense. The biggest shift in my thinking about a corporate job came when the 2020 bat virus sent the world into lockdown.

I quickly saw just how much every employer in my industry didn’t give a flying f*ck about its people.

I saw how disposable humans were.

And I saw a huge shift in corporate culture where layoffs have now become the default to keep people scared and make them work harder for no extra money.

The corporate ladder is actually cruel. It’s modern slavery.

And I’m glad I played the game to see it for myself. I did learn some valuable lessons, but I’ll never go back to it again. And I wouldn’t even recommend it to my worst enemy no matter how much I hated them.

7. Find the move that makes the whole game easier, instead of just grinding through it.

I knew from a young age I wanted to own my destiny.

It’s why I became obsessed with entrepreneurship, sales, and marketing. When I spoke to other entrepreneurs I saw a pattern. Every one of them struggled with getting leads for their business. I wondered if there was one move I could make that would make this problem go away forever.

It wasn’t easy to find an answer but I eventually did: social media.

I learned that if I could master social media, I’d never have to worry about money, opportunities, or leads ever again. And it’s been true for the last 12 years.

Whatever game you’re playing has one of these power moves. Your job is to find out what it is and exploit it. Become obsessed with that move.

The brutal truth

Game theory has been around since 1944. I didn’t invent it.

High performers all around you are treating their goals like games and winning because of it. They’re not smarter than you. They’re just taking a proven framework and applying it to their lives.

Game theory runs the world. It always will.

So the reframe here isn’t to work harder to become wealthier. It’s to use game theory to exploit incentives, unlock leverage, and discover free motivation that makes doing the work not feel like work.

Whether you’re aware of it or not, there are games currently running your life right now. You can either master those games, or those games will master you and steal away your time, money and energy. Choice is yours.

You’ll know you’ve mastered game theory when people say “you got lucky.”

If you found this helpful:

— Tim