Teaching Prospect Theory with the Deal or No Deal Game Show

Authors: 
Ardith Baker, Teresa Bittner, Christos Makrigeorgis, Gloria Johnson, Joseph Haefner
Type: 
Journal Article
Volume: 
32(3)
Pages: 
Online
Year: 
2010
Publisher: 
Teaching Statistics
URL: 
http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9639.2009.00390.x/abstract
Abstract: 

Recent evidence indicates that decision makers are more sensitive to potential losses than gains. Loss aversion psychology has led behavioural economists to look beyond expected utility by developing prospect theory. We demonstrate this theory using the Deal or No Deal game show.

The CAUSE Research Group is supported in part by a member initiative grant from the American Statistical Association’s Section on Statistics and Data Science Education