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Joker: Choice in a simple game with large stakes

By Egil Matsen and Bjarne Strøm Y

Abstract

This paper examines data from the Norwegian television game show Joker, where contestants make well-speci…ed choices under risk. The game involves very large stakes, randomly drawn contestants, and ample opportunities for learning. Expected utility (EU) theory gives a simple prediction of choice under weak conditions, as one choice is always …rst-order stochastically dominating. We document frequent, systematic and costly violations of dominance. Most alternative theories fail to add explanatory power beyond the EU benchmark, but many contestants appear to have a systematic expectation bias that can be related to Tversky and Kahneman’s (1973) “availability heuristic”. In addition, there seems to be a stochastic element in choice that is well captured by the so-called Fechner model

Topics: JEL Classi…cation, C9, C93, D81
Year: 2006
OAI identifier: oai:CiteSeerX.psu:10.1.1.418.707
Provided by: CiteSeerX
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