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Joker: Choice in a simple game with large stakes

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  • Egil Matsen

    ()
    (Department of Economics, Norwegian University of Science and Technology)

  • Bjarne Strøm

    ()
    (Department of Economics, Norwegian University of Science and Technology)

Abstract

This paper examines data from the Norwegian television game show Joker, where contestants make well-specified 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 first-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.

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Bibliographic Info

Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 8307.

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Length: 29 pages
Date of creation: 12 2006
Date of revision:
Handle: RePEc:nst:samfok:8307

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Keywords: Risky choice; stochastic dominance; choice models; stakes; game show;

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