David Lindsay’s Tennis handicap called Uncle Bob and Moral Hazard

David Lindsay’s Tennis handicap called Uncle Bob and Moral Hazard

The Uncle Bob Handicap, is named after my Uncle Bob Foote, who placed tennis till he was 91. You must hit the ball so that the weaker player can reach the ball. If the weaker player cannot reach the ball, it is their point. Every shot must be in their reach.

Last week, I wanted to say to my formidable opponent Bob Migliorini, It is true that I lacked incentive to run for a shot, when I didn’t reach it, it became my point. That is a flaw in the handicap, which involves moral hazard.

The interesting question, is did I use the right term, though I couldn’t remember it when we last played.

Wikipedia: “Economist Paul Krugman described moral hazard as “any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly.”^[5] Financial bailouts of lending institutions by governments, central banks or other institutions can encourage risky lending in the future if those that take the risks come to believe that they will not have to carry the full burden of potential losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the highest return.

Taxpayers, depositors, and other creditors often have to shoulder at least part of the burden of risky financial decisions made by lending institutions.^{[6][7][8][9]It}

It would have been clear to say that I had a conflict of interest. Moral Hazard describes my conflict in the handicap, in that I decide how hard to try to reach a ball, and the opponent bears the costs of my choosing not to push myself. The Uncle Bob handicap is a good handicap, but it does expose the stronger player of the moral hazard of the weaker player gaming the system, not trying for the shots just out of initial reach.