Optimal Stopping: The 37% Rule

Have you ever had to choose a great place to rent, or find a good parking spot? The 37% Rule helps you make the best decision when you see options one after another.

Example:

Imagine you have 30 days to find a place to rent.

Each day you see a new place, and must decide whether to take it or leave it.

How do you maximize your chance of getting the best one?

The Solution: 37% Rule

Here's a clever strategy based on mathematics:

1. Look at the first 37% (if you decide to check 30 places, that's the first 11), but don't choose any (they're just for comparison)
2. After that, pick the first option that's better than all those you've seen so far!

Optimal stopping point = n / e ≈ 0.368n ≈ 37% of n

Where n is your maxiumum number of choices, and e is Euler's number, about 2.71828

Why It Works

This strategy gives you about a 37% chance of picking the absolute best option - which might not sound high, but is much better than random guessing!

Apples on a Tree

Imagine you want to pick a nice fresh apple, and you can see 10 on the tree. They are difficult to get to. How many should you check first?

You should look at the first 4 (37% of 10) apples, then pick the next one that is better than those.

Real Life Applications

• Shopping for a bargain (when looking for the best deal)
• House/apartment hunting
• Parking spot selection
• Choosing a life partner
• Hiring employees
• Selling a house

Can the Decision be Delayed?

When you can examine all your options at the same time this is not a useful method.

The 37% Rule works best when:

• You must decide immediately
• You can't go back to previous options
• You want the relative best, not just a good one

Now you're ready to use the 37% Rule to make smart decisions in real life!