Lester (Martin Freeman) rehearsing what he was going to tell Malvo (Billy Bob Thornton) when he comes to his house ("What did you do?") is a homage to Jerry rehearsing his phone call to his father-in-law ("I don't know what to do; it's Jean.") in Fargo (1996).
The title refers to a paradox in which a crocodile steals a child, and promises the father that his son will be returned if he can correctly predict whether or not the crocodile will return the child. If the father thinks that it will not, the crocodile loses the deal no matter what. If the crocodile wants to give him back, it has to keep him. If it wants to keep him, it has to give him back.
When Lester (Martin Freeman) steps into the café at Leroy's Motor Inn, a small chalkboard can be seen in the background with the words "Special White Russian $4.95"; an obvious homage to another Coen brother's (Joel Coen & Ethan Coen) film The Big Lebowski (1998).
When Vern Thurman (Shawn Doyle) takes the call about the murder of Sam Hess, the scene is evocative of Fargo (1996), when Marge Gunderson takes a late-night phone call about a murder, including a hand being thrown over the body by the respective police officer's spouse.
The cassette tape that Malvo (Billy Bob Thornton) is listening to at the beginning of the episode appears to be a recording of one of Malvo's clients. The client is calling Malvo to tell him he plans to murder his wife while she is sleeping, but is scared to do so.