IDEAS home Printed from https://ideas.repec.org/p/hhs/sofiwp/2006_009.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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.

Suggested Citation

  • Sjögren Lindquist, Gabriella & Säve-Söderbergh, Jenny, 2006. "Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'," Working Paper Series 9/2006, Stockholm University, Swedish Institute for Social Research.
    • Handle: RePEc:hhs:sofiwp:2006_009
    as

    Download full text from publisher

    File URL: http://www.sofi.su.se/content/1/c6/03/09/74/WP06no9.pdf
    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. 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 954-970, September.
    3. 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.
    4. 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.
    5. Kate Antonovics & Peter Arcidiacono & Randall Walsh, 2005. "Games and Discrimination: Lessons From The Weakest Link," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 918-947.
    6. Metrick, Andrew, 1995. "A Natural Experiment in "Jeopardy!"," American Economic Review, American Economic Association, vol. 85(1), pages 240-253, March.
    7. 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.
    8. 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.
    9. 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, February.
    10. Thierry Post & Guido Baltussen & Martijn van den Assem, 2006. "Deal or No Deal? Decision-making under Risk in a Large-payoff Game Show," Tinbergen Institute Discussion Papers 06-009/2, Tinbergen Institute, revised 02 Feb 2006.
    11. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    12. 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.
    13. Bennett, Randall W. & Hickman, Kent A., 1993. "Rationality and the 'price is right'," Journal of Economic Behavior & Organization, Elsevier, vol. 21(1), pages 99-105, May.
    14. Cary Deck & Jungmin Lee & Javier Reyes, 2008. "Risk attitudes in large stake gambles: evidence from a game show," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 41-52.
    15. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    16. 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 1120-1141, December.
    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. Gabriella Sjögren Lindquist & Jenny Säve-Söderbergh, 2012. "Securing victory or not? Surrendering optimal play when facing simple calculations -- a natural experiment from the Swedish and US Jeopardy," Applied Economics, Taylor & Francis Journals, vol. 44(6), pages 777-783, February.
    2. Nicolas de Roos & Yianis Sarafidis, 2010. "Decision making under risk in Deal or No Deal," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(6), pages 987-1027.
    3. Gee, C., 2007. "Risky Choice and Type-Uncertainty in "Deal or No Deal?"," Cambridge Working Papers in Economics 0758, Faculty of Economics, University of Cambridge.
    4. 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.
    5. 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.
    6. Martijn J. van den Assem & Dennie van Dolder & Richard H. Thaler, 2012. "Split or Steal? Cooperative Behavior When the Stakes Are Large," Management Science, INFORMS, vol. 58(1), pages 2-20, January.
    7. Gonzalez, Luis J. & Castaneda, Marco & Scott, Frank, 2019. "Solving the simultaneous truel in The Weakest Link: Nash or revenge?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 81(C), pages 56-72.
    8. 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.
    9. Pogrebna, Ganna, 2008. "Naive advice when half a million is at stake," Economics Letters, Elsevier, vol. 98(2), pages 148-154, February.
    10. Buser, Thomas & van den Assem, Martijn J. & van Dolder, Dennie, 2023. "Gender and willingness to compete for high stakes," Journal of Economic Behavior & Organization, Elsevier, vol. 206(C), pages 350-370.
    11. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
    12. Dolgikh, Sofiia, 2019. "The influence of subjective beliefs in luck on the decision-making under risk: TV show analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 56, pages 74-98.
    13. Ganna Pogrebna & Pavlo Blavatskyy, 2009. "Coordination, focal points and voting in strategic situations: a natural experiment," IEW - Working Papers 403, Institute for Empirical Research in Economics - University of Zurich.
    14. Pavlo Blavatskyy & Ganna Pogrebna, 2006. "Loss Aversion? Not with Half-a-Million on the Table!," IEW - Working Papers 274, Institute for Empirical Research in Economics - University of Zurich.
    15. 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.
    16. Mujcic, Redzo & Powdthavee, Nattavudh, 2022. "How Do Humans Respond to Huge Financial Losses?," IZA Discussion Papers 15536, Institute of Labor Economics (IZA).
    17. 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.
    18. 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.
    19. John A. List, 2004. "Young, Selfish and Male: Field evidence of social preferences," Economic Journal, Royal Economic Society, vol. 114(492), pages 121-149, January.
    20. 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).

    More about this item

    Keywords

    Rationality; Bounded Rationality; Field Experiments;
    All these keywords.

    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

    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:hhs:sofiwp:2006_009. 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: Daniel Rossetti (email available below). General contact details of provider: https://edirc.repec.org/data/sofsuse.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.