Implicit Collusion

I used to play a lot of poker. Before the kid, before the mortgage, before the whole thing became about naps and daycare schedules. And one thing pisses me off about multi-way pots: I can't play my hands anymore.

Pocket aces, best hand in the game. I'm supposed to win with those. Against one guy, I win 80% of the time. But the cardroom is busy tonight, and two more players sit down. Fine, I'll play my aces. But now there are more players seeing the flop, more ways for the board to run ugly, more hands that can beat me. My 80% is now 55%. Still ahead, but I'm not printing money anymore. Three more sit down? I'm flipping a coin. My premium hand that used to print money is now a gamble.

But here's what really pisses me off. I want to play my top 15% hands. Ace-six offsuit. King-nine suited. These are perfectly good hands heads-up. In a two-way pot, I can play these all day. But in a six-way pot? Fold. Every time. Because the structure of the game changed. The hand that would print money as the second-best hand in a smaller game is now trash.

And it feels like everyone is coordinating against me. King-Queen offsuit. Jack-four suited. Six-seven suited. Five-four offsuit. My king-nine suited crushes most of these hands in a heads-up competition. But in a six-way pot? My king-nine suited is a massive money loser. I fold it. Every time. I fold my pretty good hand and I go back to watching MASH reruns on my iPad. Nobody looked at me cross-eyed. Nobody decided to squeeze me out of the game. The mathematically correct fold just stared me in the face.

The casino does not require honesty. It requires rules, and enforces them when they're broken. But the rules produce outcomes that look exactly like cheating, from where I'm sitting.

Three independent decisions, and you are locked out of the economy

Implicit collusion is all around, hurting you in both invidious and insidious ways.

This is the same dynamic playing out in labor markets, housing markets, and lending: three independent rational decisions by three completely unrelated actors that add up to locking you out of the economy.

Here's what it looks like from the other side: you're trying to get your life together. You need a job. You need a place to live. You need a car to get to the job once you have one so you can afford the place. And somehow, impossibly, everyone in the entire city decided on the same day to tell you no.

The employer won't hire you because your credit score is 540. You don't owe anybody money, you just got hammered by one emergency room visit three years ago and fell behind. But they run your credit and see the collection accounts and figure you're a risk. Reasonable. They need someone reliable. They are just trying to protect their business.

The landlord won't rent to you because you don't make three times the rent. You make $16/hour at the warehouse. The apartment is $1,400. Three times that is $4,200/month. You gross $2,560. Reasonable. They need tenants who can pay. They are just trying to protect their investment.

The bank won't lend you money for a used Honda because you don't have a steady address. You've been bouncing between your cousin's couch and your mom's spare bedroom. You've been employed for eight months straight, the longest stretch in years. But you don't have a lease in your name. No fixed address. Reasonable. Lending to someone without a fixed address is risky. They are just trying to manage their loan book.

So now what. No job because no credit. No apartment because no income. No car because no loan. No car means you can't get to a job that would give you income that would get you an apartment that would give you an address that would get you a loan that would get you a car. You are locked out. Every door that should open is closed. And it happened one at a time, from different people, for different reasons, none of them wrong.

From where you're standing, it looks like they all talked to each other. It looks like a conspiracy. The employer, the landlord, the bank: they got together and decided to keep you down. That's the only way it makes sense. Nobody could be that unlucky.

They didn't. That's the thing. Nobody colluded. Nobody picked you out. Everyone did the mathematically correct thing. The employer protected against worker risk. The landlord protected against tenant risk. The bank protected against borrower risk. Three completely independent decisions, made by three completely rational actors, adhering to three completely sensible standards. And the aggregate result is that you're locked out of the wholedamn economy.

The same thing happens inside organizations. It just looks different. Someone proposes a plan everyone in the room knows is doomed. The timing is unrealistic. The market is not ready. The technical debt will swallow the timeline whole. Everyone sees it. Nobody says it. Not because they're colluding. Because the project lead is senior, the meeting is running late, and the CEO wants momentum. Raising your hand makes you the problem. Staying quiet keeps you employed. The mathematically correct call is to say nothing. Six months later the initiative crashes and everyone acts surprised. But nobody was surprised. Everyone folded their hand, same as you at the poker table.

I called this implicit collusion at the top of the essay. Economists would call it a market failure, or maybe an externality: costs nobody signed up for that spill onto uninvolved people anyway. But those words are too bloodless for what it actually feels like from where you're standing. What it feels like is: the whole world figured out how to lock you out, one clipboard check at a time.

Nobody has to be out to get you. The system does it by accident, every time, and the accident feels personal. Which means nobody has to apologize either. The fix isn't asking the employer to take a chance, the landlord to lower their bar, the bank to roll the dice. The fix is noticing that three independently rational decisions can lock a person out collectively, and that's a design failure, not a people failure.

https://nickjain.com/blog/implicit-collusion