Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86601
Authors: 
Post, Thierry
Baltussen, Guido
van den Assem, Martijn
Year of Publication: 
2006
Series/Report no.: 
Tinbergen Institute Discussion Paper 06-009/2
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.
Subjects: 
Decision making under risk
Relative risk aversion
break-even effect
real incentives
game show
JEL: 
D81
C23
C93
Document Type: 
Working Paper

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