I have a friend who has worked at a small hedge fund for the better part of a decade. To his persistent frustration, the fund has remained small. It’s remained small because, despite what appear on the surface to be good returns, the fund has been unable to attract virtually any outside money. It’s a quandary for my friend. The fund’s portfolio manager, (the sole owner of the fund’s management company) has just enough wealthy family and friends who have invested in the fund to sustain the operation. Plus, the fund is located, to quote Bruce Springsteen, “down San Diego way” so my friend has a pretty enviable life style. Nonetheless, he’s ambitious and therefore frustrated because the problem with attracting assets is attributable to one thing: His boss doesn’t understand game theory.