Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show

@article{Post2008DealON,
  title={Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show},
  author={Thierry Post and Martijn J. van den Assem and Guido Baltussen and Richard H. Thaler},
  journal={EFA Submission Session (check box to submit to EFA 2006 Zurich Meeting)},
  year={2008}
}
We examine the risky choices of contestants in the popular TV game show “Deal or No Deal” and related classroom experiments. Contrary to the traditional view of expected utility theory, the choices can be explained in large part by previous outcomes experienced during the game. Risk aversion decreases after earlier expectations have been shattered by unfavorable outcomes or surpassed by favorable outcomes. Our results point to reference-dependent choice theories such as prospect theory, and… 

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