TY - JOUR
T1 - Deal or no deal? decision making under risk in a large-payoff game show
AU - Post, Thierry
AU - Van Den Assem, Martijn J.
AU - Baltussen, Guido
AU - Thaler, Richard H.
PY - 2008/3
Y1 - 2008/3
N2 - 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.
AB - 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.
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U2 - 10.1257/aer.98.1.38
DO - 10.1257/aer.98.1.38
M3 - Article
AN - SCOPUS:41849142005
SN - 0002-8282
VL - 98
SP - 38
EP - 71
JO - American Economic Review
JF - American Economic Review
IS - 1
ER -