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

The popular TV game show “Deal or No Deal” offers a unique opportunity for analyzing decision making under risk: it involves very large and wide-ranging real monetary stakes, simple stop-go decisions that require minimal skill, knowledge or strategy, and near certainty about the probability distribution. We examine the choices of 84 contestants from Belgium, Germany and the Netherlands. Contrary to expected utility theory, the choices can be explained in large part by the previous outcomes experienced by the contestants during the game. Risk aversion decreases strongly after earlier expectations have been shattered by unfavorable outcomes, consistent with the “break-even effect.” Our results point in the direction of frame-dependent choice theories such as prospect theory, and suggest that phenomena such as framing and path-dependence are relevant, even when large real monetary amounts are at stake.