"During my student days at a UCLA economics department faculty/graduate student coffee hour in the 1960s, I was chatting with Professor Armen Alchian, probably the greatest microeconomic theory economist of the 20th century.I was trying to impress Alchian with my knowledge of statistical type I and type II errors.
I explained that unlike my wife, who assumed that everyone was her friend until they prove differently, my assumption was everyone was an enemy until they proved otherwise.
The result: My wife's vision maximized the number of her friends but maximized her chances of betrayal.
My vision minimized my chances of betrayal at a cost of minimizing the number of my friends.
Alchian, donning a mischievous smile asked, "Williams, have you considered a third alternative, namely, that people don't give a damn about you one way or another?"
Initially, I felt a bit insulted, and our conversation didn't go much further, but that was typical of Alchian -- saying something profound, perhaps controversial, without much comment and letting you think it out.
Years later, I gave Alchian's third alternative considerable thought and concluded that he was right..."
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