Work

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

Year: 2008

Type: article

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. (JEL D81)

Source: American Economic Review

DOI: 10.1257/aer.98.1.38

Authors: Thierry Post, Martijn J van den Assem, Guido Baltussen, Richard H Thaler

Institutions: Nazarbayev University, Erasmus University Rotterdam, Vrije Universiteit Amsterdam, Tinbergen Institute, National Bureau of Economic Research, University of Chicago

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2142358731

FWCI: 14.83

Cites: 62

Cited by: 491

Related to: 10