Culture and Hedging

Or
Why am I not too happy that Germany won against Portugal in the quarter final of the Euro-Championship

For those residents of the sleepy town of Geneva that live in the city centre, it may come as a salvation that Germany defeated Portugal yesterday; in what was one of Portugal’s not too brilliant matches. Since “public viewing zones” and so-called “fan zones” have mushroomed in Switzerland’s major towns, every match is followed by an “auto-corso” of supporters of the respective team sneaking with their cars slowly through the city centre and honking for various minutes or hours depending on which country won the match. Now, given the high amount of Portuguese living in Geneva I would have expected at least another two sleepless nights (assuming the Portuguese would have kept winning). Not only are Germans less inclined to celebrate their victories when abroad, but also are they much fewer then the Portuguese in Geneva. So apart from my nationality I had another reason to be happy about Germany winning the match yesterday.

My enthusiasm was abruptly stopped when I realized who the potential future opponents in the final might be (assuming Germany beats the Croatians this time or the Turkish): the Netherlands or Italy (I am sorry Russia and Spain).

Now, why does this matter? Well the “shame” of loosing against the Italians is only dwarfed by loosing against the Dutch and that only by loosing against the English. The fear of loosing against one of these teams explains the seemingly mischievous happiness of Germans when the Dutch were not qualified for the World Cup and the English for this year’s Euro Cup. The funny thing is that I can not explain at all why it is such an issue for me if Germany looses against the Dutch as opposed to loosing against the Spanish. Some might say history. For me it is just that each culture picks some preferred “foes”. Growing up with this stigma and the jokes about the Dutch and Englishmen you can not loosen yourself from it once you are out of age for these kinds of jokes.

Since a second place is worth nothing in these tournaments, I would prefer Germany to loose the Portuguese in the quarter final, if I knew that Germany will loose in the final against the Dutch (Lets assume I know that Germany will loose the Dutch because I use Cosimo and Salvatore’s analysis). But then again hope dies last.

How does it relate to economics? Well, any agent that behaves rational should always bet on their greatest enemy, which gets close to minimizing the cost in the worst case scenario. “Die hard soccer fans” might consider this unethical; but then again where does this ethical understanding come from if not from something related to that person’s culture. Strangely enough, I know a Swiss who is an enthusiastic supporter of the FC Basel, the number one team in Switzerland. He always bets against his team! I presume most Italians would never do this to there favourite club.

Hence, - and I will certainly make some points with Pierre-Louis for this sentence - the impact of culture for decision making should not be under-estimated.

P.S.: For those who do not know this one yet: there is another very interesting reason why economics has a say in soccer, which can be found here.