DATE: 09/2021

SUBJECT: Don’t play it safe when you’re behind

The Race

Lap 1 of the 2021 Hungarian Grand Prix shuffled up the race order, producing an unlikely result and an exciting race. It also showed opportunity costs in action and why it can be a bad idea to play it safe when you’re behind.

How did the race get here? Hamilton continued to lead the race without getting caught up by the scrap in the first corner, but there was a red flag to retrieve cars and clear debris. The remaining cars stopped in the pit lane as the rain passed over. Once the track was clear, the cars joined a much drier track for a formation lap before the start of the race. All the cars had intermediate tyres on. These tyres are designed to perform in wet conditions without too much standing water but degrade quickly in the dry. This forced teams to make a decision: stick with the intermediates or switch to a slick tyre.

Having the leading car, Mercedes had to make that call first. They chose to stick. Then Alpine. Switch. Aston Martin. Switch. Ferrari. Switch. Alpha Tauri. Switch. All of the remaining 14 drivers came into the pits and switched their intermediate tyres for slicks and waited at the end of the lane to start their race, except for Hamilton.

Hamilton started the race as the lone driver on the grid to race on a track too dry for his tyres. This forced Mercedes to pit Hamilton, let all other cars pass him, and send him back out as the last car on the grid.

What made the race so exciting? Other than the first standing start with only one car on the grid in history, the would-be frontrunners were at the back fighting their way through the pack like they had nothing to lose.

Opportunity costs

Before he became president, Richard Nixon ran as a candidate for the House of Representatives. Up against a veteran politician, he had his work cut out. Jerry Chotiner, his advisor, said to him, “Dick, when you’re behind, you don’t play it safe. You must run a high-risk campaign” (p37, Richard Nixon: The Life, John Farrell). So, like his presidential campaign, Nixon used deceptive tactics to get ahead. In his congressional campaign, he and his team claimed his opponent toed the communist line. This was one of the first campaigns in the US where a candidate used communist smears and was, at the time, a high-risk campaign. Crucially, the opportunity cost of not taking risks (potentially losing a potential first election victory) was higher than the opportunity cost of taking risks (throwing away his existing small lead).

Revolutions have more easily come about by the involvement of the working class. The French, Russian, and Chinese revolutions have all been fought by the working class, at least in part, because they had little to lose. NB: a potential flaw with this argument is that there have been revolutions fought by the middle class (like, arguably, the Mexican Revolution). I wonder whether revolutions fought by the working class have been more successful on average compared to those fought by the middle classes.

Verstappen’s risky fight with Schumacher showed just how much both drivers want to be in the points. Hamilton’s battle with Alonso showed just how much Hamilton wanted a podium and Alonso wanted a maiden victory for Alpine. A point for further discussion is just how much of a driver’s mind is focused on opportunity costs versus winning at all costs.