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Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'

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Author Info
Sjögren Lindquist, Gabriella () (Swedish Institute for Social Research, Stockholm University)
Säve-Söderbergh, Jenny () (Swedish Institute for Social Research, Stockholm University)
Abstract

This paper empirically investigates the rationality assumption commonly applied in economic modeling by exploiting a design difference in the game-show Jeopardy between the US and Sweden. In particular we address the assumption of individuals’ capabilities to process complex mathematical problems to find optimal strategies. The vital difference is that US contestants are given explicit information before they act, while Swedish contestants individually need to calculate the same information. Given a rationality assumption of individuals computing optimally, there should be no difference in the strategies used. However, in contrast to the rational and focal bidding behaviors found in the US, the Swedish players display no optimal behavior. Hence, when facing too complex decisions, individuals abandon optimal strategies.

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Publisher Info
Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 9/2006.

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Length: 28 pages
Date of creation: 28 Dec 2006
Date of revision:
Handle: RePEc:hhs:sofiwp:2006_009

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Related research
Keywords: Rationality; Bounded Rationality; Field Experiments;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December. [Downloadable!]
  2. Rafael Tenorio & Timothy N. Cason, 2002. "To Spin or Not to Spin? Natural and Laboratory Experiments from "The Price is Right"," Economic Journal, Royal Economic Society, vol. 112(476), pages 170-195, January. [Downloadable!] (restricted)
  3. Connel Fullenkamp & Rafael Tenorio & Robert Battalio, 2003. "Assessing Individual Risk Attitudes Using Field Data From Lottery Games," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 218-226, 01. [Downloadable!] (restricted)
  4. Berk, Jonathan B & Hughson, Eric & Vandezande, Kirk, 1996. "The Price Is Right, but Are the Bids? An Investigation of Rational Decision Theory," American Economic Review, American Economic Association, vol. 86(4), pages 954-70, September. [Downloadable!] (restricted)
  5. Cary Deck & Jungmin Lee & Javier Reyes, 2008. "Risk attitudes in large stake gambles: evidence from a game show," Applied Economics, Taylor and Francis Journals, vol. 40(1), pages 41-52. [Downloadable!] (restricted)
  6. Ernst Fehr & Jean-Robert Tyran, 2005. "Individual Irrationality and Aggregate Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 43-66, Fall. [Downloadable!] (restricted)
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  7. Metrick, Andrew, 1995. "A Natural Experiment in "Jeopardy!"," American Economic Review, American Economic Association, vol. 85(1), pages 240-53, March. [Downloadable!] (restricted)
  8. Beetsma, Roel M W J & Schotman, Peter C, 2001. "Measuring Risk Attitudes in a Natural Experiment: Data from the Television Game Show Lingo," Economic Journal, Royal Economic Society, vol. 111(474), pages 821-48, October. [Downloadable!] (restricted)
    Other versions:
  9. Healy, Paul & Noussair, Charles, 2004. "Bidding behavior in the price is right game: an experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 231-247, June. [Downloadable!] (restricted)
    Other versions:
  10. Kachelmeier, Steven J & Shehata, Mohamed, 1992. "Examining Risk Preferences under High Monetary Incentives: Experimental Evidence from the People's Republic of China," American Economic Review, American Economic Association, vol. 82(5), pages 1120-41, December. [Downloadable!] (restricted)
  11. Thierry Post & Martijn J. van den Assem & Guido Baltussen & Richard H. Thaler, 2008. "Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show," American Economic Review, American Economic Association, vol. 98(1), pages 38-71, March. [Downloadable!]
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