After the first week of the NCAA tournament, the field has been winnowed from 68 teams down to 16. There have been winners aplenty. 11 seed Dayton and 10 seed Stanford face off Thursday in a game guaranteed to send a double-digit seed to the Sweet Sixteen. Tennessee has won three games in the tournament, fighting from the play-in game all the way to Sweet Sixteen matchup against Michigan. My Iowa State Cyclones lost star Georges Niang to a broken foot on Friday night but bounced back to boot hoops royalty North Carolina from the tournament. 95% of the country rejoiced when Mercer bounced Duke in the first round. (Nothing personal against coach Krijawooski; it’s just fun to root against a perennial power.)
The biggest winner, though, is Warren Buffett. None of the entries in Quicken Loans’s Billion Dollar Bracket Challenge made it through the weekend unscathed. This means that Buffett will not have to pay up on the insurance policy Quicken bought from Berkshire Hathaway.
There was never much of a chance Buffett would have to pay up, of course. Quicken actually did make it a bit easier than expected by not making people pick winners of the play-in games. Tennessee/Iowa, for example, was one “team” for the purposes of picking winners. If you flipped a coin to determine your picks, the odds of a perfect bracket would be more than 1 in 9 quintillion (a quintillion is a million billions). However, a knowledgeable picker (someone who doesn’t pick a 16 seed over a 1, for example) can likely cut those odds to around 1 in 128 billion, according to DePaul University math profession Paul Bergen.
Even if you beat those incredible odds, you wouldn’t actually get a billion dollars. You would get $25 million per year for the next 40 years, or a $500 million lump sum. Half the value is already gone, and the tax man hasn’t visited yet.
Buffett also told ESPN’s Rick Reilly that if someone had a perfect bracket within only one game remaining, he’d attempt to buy out that person for $100 million. In theory, that person would have a 50% chance of winning a $500 million lump sum, so their expected result would be $250 million. However, it’s an all or none situation. If you’re living paycheck to paycheck, would you rather have $100 million guaranteed, or a 50% chance at $500 million (plus a 50% chance of $0)? I’d take the $100 million. In fact, I’d take any amount that would allow me to quit my job and maintain my current quality of life until I die. I don’t need to be fabulously wealthy – I’d happily settle for a life of leisure.  Sleeping in a bit in the morning, writing fiction until the kids come home from school every day, traveling a bit more – that would be just fine with me. So the likely worst case scenario for Buffett would be coughing up $100 million. Realistically, he could probably cut this down to $10-20 million and still get a lot of people to take the offer. For many people, the difference between broken and $10 million is less than the difference from $10 million to $500 million.
There’s a point in this. Sometimes it makes sense to lock in a positive result rather than risking it all for a better result. Financial decisions should be made with your head and not your heart (or your greed organ).