Comments on: Deal or No Deal – A Lesson in the Stupidity of Being Greedy http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Wed, 23 May 2012 00:42:00 +0000 hourly 1 http://wordpress.org/?v= By: Summer Lewis http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-443700 Summer Lewis Wed, 12 May 2010 16:27:26 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-443700 I always watch Deal or No Deal on TV, what an exciting show and i love the briefcase girls too.-': I always watch Deal or No Deal on TV, what an exciting show and i love the briefcase girls too.-’:

]]> By: Vicky Johnson http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-27071 Vicky Johnson Tue, 19 Sep 2006 19:55:53 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-27071 How much taxes does the winner have to pay? How much taxes does the winner have to pay?

]]> By: Rajiv http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2573 Rajiv Tue, 28 Mar 2006 22:45:18 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2573 Joe, The expected value of the deal is always the mean of the boxes still in play. This is because there is an equal chance of any amount being in any of the boxes. So, technically, the EV is amt1*prob of box+amt2*prob of box ... Since the prob. of each box being selected is equal (1/number of boxes), this is mathematically equivalent to the mean. Perhaps what you are thinking about is EXPECTED UTILITY which now depends upon the risk aversion curve of the individual player. This depends not only on the individual but the level at which they are in the game (people react stronger to losses than gains of equal value) and it is harder to give up a guaranteed $100k for a shot at millions than it is to give up a guranteed $10 for a shot at hundreds. Joe,

The expected value of the deal is always the mean of the boxes still in play. This is because there is an equal chance of any amount being in any of the boxes. So, technically, the EV is amt1*prob of box+amt2*prob of box … Since the prob. of each box being selected is equal (1/number of boxes), this is mathematically equivalent to the mean.

Perhaps what you are thinking about is EXPECTED UTILITY which now depends upon the risk aversion curve of the individual player. This depends not only on the individual but the level at which they are in the game (people react stronger to losses than gains of equal value) and it is harder to give up a guaranteed $100k for a shot at millions than it is to give up a guranteed $10 for a shot at hundreds.

]]> By: Joe http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2431 Joe Fri, 24 Mar 2006 02:12:59 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2431 The EV of Deal or No Deal is NOT the pot remaining divided by the number of cases. I do not know how they come up with their number yet and I was wondering if anyone knew, but it is definately not the average of the remaining case. Anyone know? The EV of Deal or No Deal is NOT the pot remaining divided by the number of cases. I do not know how they come up with their number yet and I was wondering if anyone knew, but it is definately not the average of the remaining case. Anyone know?

]]> By: Mighty Bargain Hunter » Roundup for week of 27 February 2006 http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2023 Mighty Bargain Hunter » Roundup for week of 27 February 2006 Fri, 03 Mar 2006 07:24:42 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2023 [...] All Things Financial had a couple of posts on the new mega-payout TV show Deal or No Deal. This one is about greed. The comments also have some good links related to the show. [...] [...] All Things Financial had a couple of posts on the new mega-payout TV show Deal or No Deal. This one is about greed. The comments also have some good links related to the show. [...]

]]> By: Hazzard http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2021 Hazzard Thu, 02 Mar 2006 22:32:13 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2021 I found it too stressful to watch. :) Some of those people aren't too bright!! I found it too stressful to watch. :)

Some of those people aren’t too bright!!

]]> By: Tim2.0 http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2015 Tim2.0 Thu, 02 Mar 2006 16:48:21 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2015 Anon makes a good point about the EV of the game. The Banker always offers a deal which is less than your EV, preying on people's fear of walking away with very little money. (It also serves to make people more inclined to choose "no deal" which makes the show more entertaining.) I believe this is a general phenomenon with gambling for large stakes (like the lottery). House percentages can be much higher when the stakes are larger because people are willing tradeoff EV for hope of a big payoff. While the show is pretty entertaining, I think it would be much more fun if the Banker made his normal -EV deals but also threw in some +EV deals as well. It would be great to see if people are smart enough to figure it out and how they react. Some lower priced +EV deals might be statistically correct to take, but would anyone on the show really take a "correct" $9000 deal, for example, when the chance at hundreds of thousands is staring them in the face? Anon makes a good point about the EV of the game. The Banker always offers a deal which is less than your EV, preying on people’s fear of walking away with very little money. (It also serves to make people more inclined to choose “no deal” which makes the show more entertaining.)

I believe this is a general phenomenon with gambling for large stakes (like the lottery). House percentages can be much higher when the stakes are larger because people are willing tradeoff EV for hope of a big payoff.

While the show is pretty entertaining, I think it would be much more fun if the Banker made his normal -EV deals but also threw in some +EV deals as well. It would be great to see if people are smart enough to figure it out and how they react. Some lower priced +EV deals might be statistically correct to take, but would anyone on the show really take a “correct” $9000 deal, for example, when the chance at hundreds of thousands is staring them in the face?

]]> By: RS http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2009 RS Thu, 02 Mar 2006 01:22:38 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2009 We are the opposite, my wife loves it and I tolerate it. I just think that most of the idio...I mean people are totally gambling. They have no clue if they should of should not keep going. I prefer games where you have to know something (Jeopardy), not games that are totally just luck. All that matters is which numbers they pick since it is obvious that most are not considering the odds at all. We are the opposite, my wife loves it and I tolerate it. I just think that most of the idio…I mean people are totally gambling. They have no clue if they should of should not keep going. I prefer games where you have to know something (Jeopardy), not games that are totally just luck. All that matters is which numbers they pick since it is obvious that most are not considering the odds at all.

]]> By: Anon http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2008 Anon Thu, 02 Mar 2006 00:13:02 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2008 The "Banker" always offers less than the expected value of the game (the EV is simply the total pot remaining divided by the number of cases). Statistically speaking, one should never take the offer, so her decision could not possibly be considered "stupid", and is less "greedy" than mathematically correct. However, the discount to EV is there to provide the house an advantage over the long term. A single contestant cannot play more than one game, so personal risk has to come into play for that game. The “Banker” always offers less than the expected value of the game (the EV is simply the total pot remaining divided by the number of cases). Statistically speaking, one should never take the offer, so her decision could not possibly be considered “stupid”, and is less “greedy” than mathematically correct.

However, the discount to EV is there to provide the house an advantage over the long term. A single contestant cannot play more than one game, so personal risk has to come into play for that game.

]]> By: fivecentnickel.com http://allfinancialmatters.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/comment-page-1/#comment-2007 fivecentnickel.com Wed, 01 Mar 2006 23:43:17 +0000 http://allthingsfinancialblog.com/2006/03/01/deal-or-no-deal-a-lesson-in-the-stupidity-of-being-greedy/#comment-2007 Heh. My kids and I like watching it, but my wife hates it. --nickel Heh. My kids and I like watching it, but my wife hates it.

–nickel

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