IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/66832.html
   My bibliography  Save this paper

An empirical investigation into the propensity of reckless decision making within the high pressure environment of Deal or No Deal

Author

Listed:
  • Whitle, Richard
  • Rae, Jonathan
  • Pyke, Chris

Abstract

This paper discusses human attitudes towards risk and the development of expected utility models, laying the foundations for the creation of prospect theory in 1979. It proceeds to analyse the decisions of contestants on the popular TV game show Deal or No Deal to attempt to observe any evidence of differing levels of risk aversion under losses and gains as predicted by prospect theory. The results reveal some evidence of decreased risk aversion in the domains of losses and gains, with contestants displaying behaviour consistent with the break-even and house-money effects. We conclude there may be enough evidence of variable reference points to warrant further investigation, and propose suggestions for further research

Suggested Citation

  • Whitle, Richard & Rae, Jonathan & Pyke, Chris, 2015. "An empirical investigation into the propensity of reckless decision making within the high pressure environment of Deal or No Deal," MPRA Paper 66832, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66832
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/66832/1/MPRA_paper_66832.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/66913/1/MPRA_paper_66832.pdf
    File Function: revised version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/81396/8/MPRA_paper_81396.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    3. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    4. Roger Hartley & Gauthier Lanot & Ian Walker, 2014. "Who Really Wants To Be A Millionaire? Estimates Of Risk Aversion From Gameshow Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(6), pages 861-879, September.
    5. 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 821-848, October.
    6. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    7. Nguyen, Quang & Leung, PingSun, 2009. "Do Fishermen Have Different Attitudes Toward Risk? An Application of Prospect Theory to the Study of Vietnamese Fishermen," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(3), pages 1-21, December.
    8. Bosch-Domenech, Antoni & Silvestre, Joaquim, 1999. "Does risk aversion or attraction depend on income? An experiment," Economics Letters, Elsevier, vol. 65(3), pages 265-273, December.
    9. Robert Gertner, 1993. "Game Shows and Economic Behavior: Risk-Taking on "Card Sharks"," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 507-521.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klemens Keldenich & Marcus Klemm, 2014. "Double or nothing?! Small groups making decisions under risk in “Quiz Taxi”," Theory and Decision, Springer, vol. 77(2), pages 243-274, August.
    2. Robert Brooks & Robert Faff & Daniel Mulino & Richard Scheelings, 2009. "Deal or No Deal, That is the Question: The Impact of Increasing Stakes and Framing Effects on Decision‐Making under Risk," International Review of Finance, International Review of Finance Ltd., vol. 9(1‐2), pages 27-50, March.
    3. Egil Matsen & Bjarne Strøm, 2006. "Joker: Choice in a simple game with large stakes," Working Paper Series 8307, Department of Economics, Norwegian University of Science and Technology.
    4. Mujcic, Redzo & Powdthavee, Nattavudh, 2022. "How Do Humans Respond to Huge Financial Losses?," IZA Discussion Papers 15536, Institute of Labor Economics (IZA).
    5. Anna Conte & Peter G. Moffatt & Fabrizio Botti & Daniela T. Di Cagno & Carlo D’Ippoliti, 2012. "A test of the rational expectations hypothesis using data from a natural experiment," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4661-4678, December.
    6. Antoni Bosch-Domènech & Joaquim Silvestre, 2003. "Do the Wealthy Risk More Money? An Experimental Comparison," Discussion Papers 03-15, University of Copenhagen. Department of Economics.
    7. Roger Hartley & Gauthier Lanot & Ian Walker, 2014. "Who Really Wants To Be A Millionaire? Estimates Of Risk Aversion From Gameshow Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(6), pages 861-879, September.
    8. Adriaan Soetevent & Liting Zhou, 2016. "Loss Modification Incentives for Insurers Under Expected Utility and Loss Aversion," De Economist, Springer, vol. 164(1), pages 41-67, March.
    9. Giannikos, Christos I. & Kakolyris, Andreas & Suen, Tin Shan, 2023. "Prospect theory and a manager's decision to trade a blind principal bid basket," Global Finance Journal, Elsevier, vol. 55(C).
    10. repec:zbw:rwirep:0278 is not listed on IDEAS
    11. Klemens Keldenich & Marcus Klemm, 2011. "Double or Nothing!? Small Groups Making Decisions Under Risk in “Quiz Taxi”," Ruhr Economic Papers 0278, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    12. Botti, Fabrizio & Conte, Anna & Di Cagno, Daniela & D'Ippoliti, Carlo, 2009. "Lab and framed lab versus natural experiments: Evidence from a risky choice experiment," Research in Economics, Elsevier, vol. 63(4), pages 282-295, December.
    13. Hong Chao & Chun-Yu Ho & Xiangdong Qin, 2017. "Risk taking after absolute and relative wealth changes: The role of reference point adaptation," Journal of Risk and Uncertainty, Springer, vol. 54(2), pages 157-186, April.
    14. Keldenich, Klemens & Klemm, Marcus, 2011. "Double or Nothing!? Small Groups Making Decisions Under Risk in ""Quiz Taxi""," Ruhr Economic Papers 278, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    15. Bliss, Richard T. & Potter, Mark E. & Schwarz, Christopher, 2012. "Decision making and risk aversion in the Cash Cab," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 163-173.
    16. Foster, Gigi & Frijters, Paul & Schaffner, Markus & Torgler, Benno, 2018. "Expectation formation in an evolving game of uncertainty: New experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 379-405.
    17. repec:dgr:rugsom:14022-eef is not listed on IDEAS
    18. Ivan Barreda-Tarrazona & Ainhoa Jaramillo-Gutierrez & Daniel Navarro-Martinez & Gerardo Sabater-Grande, 2014. "The role of forgone opportunities in decision making under risk," Journal of Risk and Uncertainty, Springer, vol. 49(2), pages 167-188, October.
    19. Patrick DeJarnette & David Dillenberger & Daniel Gottlieb & Pietro Ortoleva, 2020. "Time Lotteries and Stochastic Impatience," Econometrica, Econometric Society, vol. 88(2), pages 619-656, March.
    20. Uyanga Turmunkh & Martijn J. van den Assem & Dennie van Dolder, 2019. "Malleable Lies: Communication and Cooperation in a High Stakes TV Game Show," Management Science, INFORMS, vol. 65(10), pages 4795-4812, October.
    21. Pavlo Blavatskyy & Ganna Pogrebna, 2008. "Risk Aversion when Gains are Likely and Unlikely: Evidence from a Natural Experiment with Large Stakes," Theory and Decision, Springer, vol. 64(2), pages 395-420, March.
    22. Maximilian Rüdisser & Raphael Flepp & Egon Franck, 2017. "Do casinos pay their customers to become risk-averse? Revising the house money effect in a field experiment," Experimental Economics, Springer;Economic Science Association, vol. 20(3), pages 736-754, September.

    More about this item

    Keywords

    Decision making under uncertainty; behavioural economics; behavioural finance; biases & heuristics; Prospect Theory.;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:66832. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.