What I've learned about risk aversion by playing Farkle

When I was a kid, I went to the after school program at my elementary school every day through fourth grade. By the time I stopped going, I was almost always the oldest kid there, so naturally I had developed something of a rapport with the day care teachers. Basically, I was super-cool and awesome because instead of playing tag at recess (I was way too lazy for that), I played Farkle with the teachers.

I didn't know it at the time, but I was learning a lot about myself, and my comfort when it comes to risk.

Farkle, for those of you who maybe think I'm talking about a made up game, is a dice game. Played with 6 dice, you roll at the start of each round - any 1s are counted as 100 points, and 5s are 50 points. For three of a kind, you get 100x that number (three 6s would be 600 points), and there are additional rules that can earn you more points. The risk comes in next. After you've rolled once, you can either take the points you've earned and stop playing, or you can set aside at lease one scoring die and roll again. When you go that route, you can either win big, or lose all your points if you don't roll any more scoring dice.

When we play, R and I play to 10,000 points. I've noticed a few things about both of us in playing Farkle a lot over the past few weeks:

• We're both pretty risk averse. If we have five dice that we can roll, and we're only gambling 50 points, we'll probably go for it, but if there's only one die left, we'll take the points we have rather than risk them 9 times out of 10.
• When we're falling behind, we look for big wins. This is probably not the right move necessarily, as we lose a lot of smaller point accumulations in the process!
• We'll also take bolder risks when we have a comfortable lead, but comfortable means something different to each of us. To me, a comfortable lead is when my score is around one and 1/2 times his!
• We're both very competitive.

I can't speak to R's attitudes outside of Farkle, but I'd say that mine are pretty much in line with my attitudes in the game. I don't like to take big risks or gamble with any quantities that I'd be upset with losing. I'm a "what if" kind of thinker, and I know that can do a lot to both help and hurt me, in Farkle and in life.

One thing that I can absolutely point to in Farkle that relates to my attitude toward finance is the idea that I want to get as far ahead as possible, as quickly as I can. Right now, that means paying off my loans, but in a couple of years it might mean saving aggressively for retirement or other goals. The more I do now, when I know what my circumstances are for the immediate future, the more opportunity I'll have later on down the road to take reasonable risks. If I have a 8,000 point lead, I'll probably roll the one die left over, even if it means I might not score any points that round.