:: THIS IS A REPEAT OF AN APRIL 05, 2006 POST ::
Is anyone else mindlessly fascinated by the TV game show “Deal Or No Deal“?
Here’s a rundown from Wikipedia:
Deal or No Deal is a television game show format owned by Dutch-based production company Endemol, known for creating such shows as Big Brother. The format first aired in The Netherlands on December 22nd, 2002, but has since spread internationally, now airing in 45 countries, including Australia on July 13, 2003, the United Kingdom, the United States, Mexico, Turkey, Canada, Italy, Israel, Tunisia, Romania, Poland, India and Germany.
The basic format of Deal or No Deal consists of a number of cases (usually 26) each containing a different amount of money. Not knowing the sum of money in each case, the contestant picks one case which potentially contains the contestant’s prize. They then open the remaining cases, one by one, revealing the money they contained. At pre-determined intervals the contestant receives an offer from the bank (run by “The Banker“) to purchase the originally chosen case from the contestant, the offer being based on the potential value of the contestant’s case. The contestant must then decide whether to take the deal from the bank, or to continue opening briefcases. If they decide not to take the deal and reveal low values then the next bank offer is likely to be higher (as the contestant’s case is proven not to contain these low values). Alternatively they risk revealing higher values, lowering future offers from the bank.
You can actually play a web-based version (without real money) at the NBC.com website.
The U.S. version’s ‘blacked out’ banker is Peter Yamo Abbay. Besides a few short appearances on other TV shows, including one episode of “House” as a ‘Cab Driver’, he is probably not recognizable by name.
Some help in winning, again from Wikipedia:
The expected winning at any point in the game is the mean of the values contained in the unopened boxes. This expected value of the player’s position is what he/she should expect to win if he/she refuses all offers, or what to expect if he/she were to open his/her own briefcase. To maximize their expected return without regard to risk, a player’s optimal strategy is to reject the banker’s offer if it is below the mean value of the unrevealed cases. Typically, the banker’s offer undervalues the remaining cases significantly at the start of a game. The gap closes later on, giving the player a strong motivation to continue to play early in the game, but less so as the game progresses. Because the banker’s deals are almost always lower than the expected value, “no deal” seems to be statistically a better choice.
A team of economists (Post, Van den Assem, Baltussen & Thaler) have analyzed the decisions of people appearing in Deal or No Deal:
Risk aversion generally decreases after prior expectations have been shattered by eliminating valuable briefcases. Contestants facing a large reduction in the expected prize during the game may even become risk seeking; they reject bank offers that exceed the expected prize and thus enter “unfair gambles”. This path-dependent pattern occurs in all editions of the game, despite sizable differences in the initial stakes across the editions. Thus, “losers” seem less risk averse than “winners”, irrespective of the amounts at stake.
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.
Bottom line: what would you risk for a chance at $1,000,000? The contestant application to be on the show is here.
Deal Or No Deal, Endemol, The Banker
