Skip to main content
Article thumbnail
Location of Repository

Decision Making Under Risk in Deal or no Deal ∗

By Nicolas De Roos and Yianis Sarafidis

Abstract

We analyse the choices of 399 contestants in the Australian version of the television game show Deal or no Deal. We calculate risk-aversion bounds for each contestant, revealing considerable heterogeneity. We then estimate a structural stochastic choice model that captures the dynamic decision problem faced by contestants. To address individual heterogeneity, we nest the dynamic problem within the settings of both a random effects and a random coefficients probit model. Our structural model produces plausible estimates of risk aversion, confirms the role of individual heterogeneity and suggests that a model of stochastic choice is indeed appropriate. We also examine generalisations to expected utility theory, finding that the rank dependent utility model provides substantially improved explanatory power and indicates optimism. Finally, we do not find strong evidence in favour of an endowment effect for lotteries. JEL Classification: D81, C9

Topics: decision-making under risk, risk aversion, expected utility, rank dependent
Year: 2006
OAI identifier: oai:CiteSeerX.psu:10.1.1.318.9931
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • http://webauth.econ.usyd.edu.a... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.