Podcast Summary: The Brainy Business | Ep. 554

"Lucky By Design: Strategies for Success in a Scarcity Economy"
Host: Melina Palmer
Guest: Dr. Judd Kessler (Howard Marks Professor of Business Economics and Public Policy at Wharton, Author of Lucky by Design)
Release Date: December 4, 2025

Episode Overview

This episode explores the concept of "hidden markets"—environments where valuable resources are allocated through subtle rules and social mechanisms rather than simple monetary bidding. Host Melina Palmer interviews Dr. Judd Kessler about the principles of market design, the psychology behind scarcity, and strategies individuals and organizations can use to become “lucky by design.” Together, they dissect real-life examples ranging from ticket sales to job searches and daily calendar management, aiming to help listeners recognize and navigate scarcity-driven environments more effectively.

Key Discussion Points & Insights

1. What is Market Design?

• Market Design Basics:
  • Explores how resources are allocated in environments where prices aren’t the dominant mechanism ([03:21]).
  • Classic applications: Medical residencies, school choice algorithms.
• Beyond Price:
  • Many essential goods (concert tickets, school places, jobs) are not distributed via price but through other allocation rules ([05:00]).
• Design Intention vs. Outcome:
  • Even well-intentioned market rules can have unintended, unfair, or inefficient outcomes ([05:53]).

2. Hidden Markets in Everyday Life

• Tickets and Tech:
  • Taylor Swift ticket example: Designers avoid high prices for fairness, but “first come, first served” can become dominated by bots and automation ([05:53–08:08]; memorable aside on fans camping for tickets and the role of technology).
• Rock, Paper, Scissors as Market Allegory:

  • Teaching his young daughter the game, Kessler illustrates that success depends on recognizing the rules, understanding them, and strategizing within them ([10:18–13:12]).

    “It’s not just that you have to see that a market exists... you also need strategy to figure out how to get what you want right.”
    — Dr. Judd Kessler ([11:48])

3. The Three E's in Market Design ([14:15])

• Efficiency: Allocating items to the person who values them most.

• Equity: Ensuring a fair shot regardless of socioeconomic status.

• Ease: Minimizing participant ordeal and complexity.

  “Whenever we look at a hidden market, those are the three things we want to think [about]: is the rule achieving... Efficiency, Equity, and Ease?”
  — Dr. Judd Kessler ([15:09])

4. Go for Gold vs. Settle for Silver: Personal Strategy

• First Come, First Serve—Applied:
  • Hot restaurant reservations and Costco parking lot choices: Is it better to aim for the “best” or secure a “good enough” outcome with less competition? ([18:33–21:45])
• College Admissions & Job Searches:
  • The same dynamic applies: Should you apply to the high-reach school/job first, or target options with higher odds? Understand your preferences and your competition’s to strategize ([22:16–25:16]).
• Perspective Shift:
  • Sometimes what feels like settling (silver) is actually a win if it aligns with your real priorities.

5. Signaling, AI, and Evolving Markets

• The Power & Limits of Signals:
  • In "choose me" settings (college, jobs, dating), signaling sincere interest/fit is key ([25:16, 28:11]).
  • Signals used to be cover letters; now, AI-generated letters dilute that value—markets adapt.
• Hidden Market Innovation:
  • Dating apps now monetize signaling (“super likes”) to distinguish genuine intent as mass-swiping ruins basic signals ([31:35]).
• The Return of the In-Person Signal:

  • As digital signals get noisier, real-world engagement regains value ([33:11]).

    “If you say to me, hey, you can either do a zoom interview or you can come in person... Going in person will signal, oh, actually I care enough about this job.”
    — Dr. Judd Kessler ([33:11])

6. Being Your Own Market Designer: Emails & Meetings

• Scarcity of Time:
  • You’re a “market designer” for your own attention and time ([38:25]).
• Inbox & Recurring Meetings:

  • Default behaviors (responding only after multiple follow-ups, allowing meetings to recur unchecked) create perverse incentives.

  • Solution: Triage differently, question standing meetings—control the “allocation” of your time ([40:37–42:14]).

    “Recurring [calendar] meetings... always have rights to that spot whether the project needs the time or not. And... that's what all my recurring meetings are... It's definitely not right for my time.”
    — Dr. Judd Kessler ([40:37–42:14])

Notable Quotes & Memorable Moments

• On Market Rules:

  “We’re actually living in a non-optimized world of sloppy design. This gives an opportunity to pause and ask: are we playing the game the way we should be?”
  — Melina Palmer ([47:07])

• On Everyday Market Participation:

  “These are very important markets that we play in weekly.”
  — Dr. Judd Kessler on parking lots and dinner reservations ([18:16])

• On Outdated Signaling:

  “All of the best emails that I’ve ever received… have all come in the last six months... Now everybody’s sending me these great cover letters. I used to be able to use it as a screen. I can't do that anymore.”
  — Dr. Judd Kessler ([25:29–28:11])

• On Responding to Syllabus Questions:

  “If you ask me something on the syllabus, you will get a Rick roll.”
  — Dr. Judd Kessler ([43:54])

Timestamps for Key Segments

• Introduction to Hidden Markets: [00:38–03:21]
• Classic Market Design Examples: [03:21–05:00]
• Tickets & Good Intentions Gone Wrong: [05:53–08:24]
• Rock, Paper, Scissors and Hidden Market Strategy: [10:18–13:12]
• The Three E’s—Efficiency, Equity, Ease: [14:15–17:32]
• Personal Strategy: Go for Gold vs. Settle for Silver: [18:33–23:59]
• Choose-Me Markets & New Signals: [25:16–33:11]
• Designing Your Own Scarce Resources (Time, Email, Meetings): [38:25–42:14]
• Recap and Actionable Takeaways: [47:07–47:56]

Actionable Insights

• Recognize the market: Look for hidden competitions around scarce goods—even in everyday life.
• Strategize around the rules and the competition: Sometimes it’s wise to “settle for silver,” especially if what you value most differs from the crowd.
• Design your own environment: Small changes in your inbox or calendar can give you immense control over your scarcest resource—time.
• Signal thoughtfully: As automated signals become noisier due to technology, genuine, hard-to-fake gestures (real engagement, social proof, in-person shows of interest) will increase in value.

Further Exploration

• Guest’s website: juddbkessler.com or getluckybydesign.com
• Host on social: @TheBrainyBiz (most platforms), Melina Palmer on LinkedIn

Closing Thought

“When you know the hidden market and you know the odds, sometimes you can change the game itself and all of it can be set up to cater better to what you are trying to accomplish.”
— Melina Palmer ([47:24])

This episode challenges listeners to spot the games behind the systems they navigate and to play (or design) them thoughtfully—whether pursuing the last parking space, a dream job, or a golden business opportunity.