In his song, “The Gambler”, Kenny Rogers hit the nail on the head with the wordsd: “You’ve got to know when to hold ’em; Know when to fold ’em; Know when to walk away; And know when to run”.
Whether you’re dating with the hope of getting married, or interviewing a number of candidates with the hope of hiring one, knowing when to stop is very important. That’s because if you stop too early, you hire a candidate who is not the best candidate. And if you stop too late, you have just wasted time dating every other person who was better than the best candidate. And the best candidate may not still be on the market if you eventually decide to go back.
In Computer Science we call these kind of problems optimal stopping problems and for problems such as dating and hiring, we now know from Computer Science that the optimal stop is 37%. And here’s how the algorithm works:
- Short list n candidates.
- Assess the first 37% of candidates and reject all of them.
- Start interviewing the rest of the candidates and select the first candidate who is better than all of the ones you have seen so far.
I’ve heard it said that you can either have time or money and you can’t have both. From what I’ve observed in those that I have interacted with, this is generally true for most that are in the wealth accumulation phases of their life. In other words, people who are now making money, for the most part, don’t have time. And people accumulate wealth for different reasons but let’s simplify and say that you’re building wealth for the purpose of financing a certain lifestyle, this is also an optimal stoping problem: if you stop working too early (or not work hard enough, or do the wrong kind of income generating activity), you may not have enough money to finance your ideal lifestyle. And if you you stop too late, you won’t have enough time (or be too old to) enjoy the lifestyle.