Finnish EV Team Learns a $400,000 Lesson in Humility at Automotive X-Prize Race

http://earthandindustry.com/2010/10/finnish-ev-team-learns-a-400000-lesson-in-humility/

by sprinkle • 16 years ago

13 14 16 years ago

I would call it humility if they'd bragged about not signing the agreement - without knowing their reasons, the headline is a little sensationalistic.

iuytgfrdsza• 16 years ago

If they didn't sign because they thought they would win and didn't want to share the prize then it's a lesson in humility!

pavel_lishin2• 16 years ago

Sure, but that's a big if with no corroborating evidence.

StavrosK5• 16 years ago

It still isn't. They bet on their car winning, and they lost. They didn't go around trash-talking competitors or bragging, they just thought the agreement was not financially sound for them.

scotje• 16 years ago

So, if they had signed the agreement and won, would they have learned an $800,000 lesson in the evils of socialism or something?

They placed a bet on their car and it didn't pay off. Doesn't mean it was a bad bet. (In fact, since it sounds like they were the consensus favorites going into the competition, it was probably a good bet.)

StavrosK5• 16 years ago

Way to succumb to confirmation bias (EDIT: I actually meant outcome bias, thanks for the correction), article. If they won, they'd lose 600k (I'm not sure where the other 200k went, for a total of 2.5m). If they lost, they'd win 400k.

They would benefit from this only if they had less than a 40% chance to win, which, from the looks of it, they didn't. From their view, it must have looked like the other teams tried to get them (who were almost certainly going to win) to hand out some of their cash to them.

It was a rational decision, and they did make the right choice given the information available at the time. They could have been charitable, but that's not mandatory.

maukdaddy• 16 years ago

This has nothing to do with confirmation bias and everything to do with the prisoner's dilemma (game theory)

http://en.wikipedia.org/wiki/Prisoners_dilemma

StavrosK5• 16 years ago

I disagree on both counts. The payoff matrix is nothing like the prisoner's dilemma, and it's confirmation bias on the writer's part.

demallien• 16 years ago

I don't see how the Prisoner's Dilemma applies here - there was no question of being sold out by the other party.

Indeed, judging by the article, they would have been very confident of being in the best 2 cars, which allows for a simple calculation of the expected return from signing the contract (the same principle applies if you want to break out the odds of coming 3rd, 4th and 5th too, but they don't change the result much - I leave the proof as an exercise for the reader ;)

if they sign the contract and come first, they win 1.7m, if they come second they win 0.4m. If they don't sign and come first, they win 2.5m, and if they come second they win 0. How confident do you need to be about coming first to not want to sign the contract? let x be the probability that you come first, we can determine what x needs to be before signing looks appealing: x * 2.5 + (1 - x) * 0 = x * 1.7 + (1 - x) * 0.4 2.5x = 1.3x + 0.4 1.2x = 0.4 x = 0.4/1.2 = 0.333

In other words, for the contract to look attractive to them, they would have to think that they had a 33% chance or less of winning. Which considering there were only 5 cars in the race, and theirs was clearly one of the better cars, makes the contract look very unappealing.

Finnish EV Team Learns a $400,000 Lesson in Humility at Automotive X-Prize Race

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