| Title | Deal or No Deal? Decision-making under Risk in a Large-payoff Game Show |
|---|---|
| Author | Post, G.T. (Thierry); Baltussen, G. (Guido); Assem, van den M.J. (Martijn) |
| Date | 2006-01-11 |
| Language | English |
| Type | working paper |
| Abstract | The popular television game show deal or No Deal offers a unique opportunity for analyzing decision making under risk: it involves very large stakes, simple take-or-leave decisions that require minimal skill or strategy and near-certainty about the probability distribution. Based on a panel data set of the choices of contestants in all game rounds of 53 episodes from Australia and the Netherlands, we find an average Pratt-Arrow relative risk aversion (RRA) between roughly 1 and 2 for initial wealth levels between 0 and 50,000. The RRA differs substantially across the contestants and some even exhibit risk seeking behavior. The cross-sectional differences in RRA can be explained in large part by the previous outcomes experienced by the contestants during the game. Most notably, consistent with the break-even effect,the RRA strongly decreases following earlier losses and risk seeking arises after large losses. |
| Publication | http://hdl.handle.net/1765/7230 |
| Persistent Identifier | urn:NBN:nl:ui:15-1765/7230 |
| Metadata | XML |
| Repository | Erasmus University Rotterdam |
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