Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show
50 Pages Posted: 16 Dec 2004 Last revised: 21 Feb 2012
Date Written: February 20, 2012
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.
Keywords: Decision making under risk, Expected utility theory, Prospect theory
JEL Classification: D81
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Decision Making Under Risk in Deal or No Deal
By Nicolas De Roos and Yianis Sarafidis
Risk Aversion When Gains are Likely and Unlikely: Evidence from a Natural Experiment With Large Stakes
Loss Aversion? Not With Half-a-Million on the Table!
Risk Attitudes in Large Stake Gambles: Evidence from a Game Show
By Cary A. Deck, Jungmin Lee, ...
Risky Choice and the Relative Size of Stakes
By Guido Baltussen, Thierry Post, ...
Models of Stochastic Choice and Decision Theories: Why Both are Important for Analyzing Decisions
Naive Advice When Half-a-Million is at Stake
Testing the Predictions of Decision Theories in a Natural Experiment when Half a Million is at Stake