How Sheetal Got Paid

Why am I sitting alone in my apartment, shouting at my TV? Why are my books sitting neglected beside me on the couch as I plead with the TV? Because I am watching the latest mindless TV game show, Deal or No Deal. I cannot believe that some people keep going with 100,000's of thousands of dollars on the line. While I am yelling Deal! Deal! You moron!, the audience is egging them on to keep going. Usually I am right, and the person ends up with less money than they had in the middle of the game. For those of you who are unfamiliar with this show here is a short summary of the rules taken from NBC's website:

"The rules are simple. Choose a briefcase. Then as each round progresses, you must either stay with your original briefcase choice or make a "deal" with the bank to accept its cash offer in exchange for whatever dollar amount is in your chosen case.

Once you decide to accept or decline the bank's offer, the decision is final.

Contestants are encouraged to ask friends or family in the audience for advice; however, only the contestant's answer will be considered binding and final."

I think that they try to pick people who generally make low salaries in noble professions (such as teachers, people in the military, firefighters, and a doctor who runs a clinic in a low income area). Or they will pick someone who has a large debt or specific problem that they need money for. And I love it when they surprise the contestant with a family member who they didn't think could come.

I heard about an interesting study done by some economists, who analyzed versions of Deal or no Deal Game all around the world (45 different countries).

"A team of economists - Post, Van den Assem, Baltussen & Thaler (report) - have analyzed the decisions of people appearing in Deal or No Deal and found, among other things, that contestants are less risk averse when they have seen their expected winnings tumble. "Losers" tend to continue playing the game even if this means rejecting bank offers in excess of the average of the remaining prizes. The findings provide support for behavioral economists, who claim that the classical expected utility theory falls short in explaining human behavior by not accounting for the context of decisions. The study of the Dutch is unique, for the underlying "experiment" Deal or No Deal is characterized by high stakes, a transparent probability distribution and only simple stop-go decisions that require minimal skill or strategy." From this Wikipedia article.

What do you think about this game? Do you think that this show counts as gambling? You haven't put up any of your own assets to enter the game, so you aren't losing anything that was yours to begin with? But once you get the first offer, you are gambling with that money, so...?

Last night Sheetal Shetty won $375,000. I wanted her to deal at 199,000. She is the first contestant to prove me wrong. It was pretty exciting. I still think its a stupid game, so why can't I stop watching?