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http://ssrn.com/abstract=636508
 
 

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Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show


Thierry Post


Koc University - Graduate School of Business

Martijn J. Van den Assem


VU University Amsterdam - Faculty of Economics and Business Administration

Guido Baltussen


Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Richard H. Thaler


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

February 20, 2012

American Economic Review, Vol. 98, No. 1, pp. 38-71, March 2008

Abstract:     
We examine the risky choices of contestants in the popular TV game show "Deal or No Deal" and related classroom experiments. Contrary to the traditional view of expected utility theory, the choices can be explained in large part by previous outcomes experienced during the game. Risk aversion decreases after earlier expectations have been shattered by unfavorable outcomes or surpassed by favorable outcomes. Our results point to reference-dependent choice theories such as prospect theory, and suggest that path-dependence is relevant, even when the choice problems are simple and well-defined, and when large real monetary amounts are at stake.

Number of Pages in PDF File: 50

Keywords: Decision making under risk, Expected utility theory, Prospect theory

JEL Classification: D81

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Date posted: December 16, 2004 ; Last revised: February 21, 2012

Suggested Citation

Post, Thierry and Van den Assem, Martijn J. and Baltussen, Guido and Thaler, Richard H., Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show (February 20, 2012). American Economic Review, Vol. 98, No. 1, pp. 38-71, March 2008. Available at SSRN: http://ssrn.com/abstract=636508

Contact Information

Thierry Post (Contact Author)
Koc University - Graduate School of Business ( email )
Rumelifeneri Yolu
34450 Sariyer
Istanbul
Turkey
Martijn J. Van den Assem
VU University Amsterdam - Faculty of Economics and Business Administration ( email )
De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
Guido Baltussen
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )
P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
Richard H. Thaler
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5208 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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