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Economists Learn from Game Show 'Deal or No Deal'


It's been called brilliantly simple and the dumbest game show ever. NBC launched Deal or No Deal in earnest this week. Versions of the game have run in some 40 countries. In the U.S. it features models holding numbered briefcases. The host is actor Howie Mandel.

(Soundbite of show 'Deal or No Deal')

Mr. HOWIE MANDEL (Actor): Okay, there are 26 cases held by 26 lovely ladies. Hello, ladies.

WOMEN: Hi, Howie.

BLOCK: The cases all contain money, from one penny up to a million dollars or more. There are no trivia questions, no bugs to eat, just contestants taking calculated risks. And that's why the game has drawn the interest of some economists. NPR's David Kestenbaum reports.


Deal or No Deal may seem made for America, but it was born far away in the Netherlands.

Dr. THEIRRY POST (Economist, Erasmus University) The show is called (speaks foreign language) and if you translate it literally it means The Chase for the Millions.

KESTENBAUM: That is Theirry Post. He is an economist at Erasmus University in the Netherlands. He studies how people decide what risks they are prepared to take. A typical experiment, he and his colleagues brought students into the lab and had them assess different financial risks. But there really wasn't much at stake. The researchers couldn't afford an award of more than, say, $10.00.

Then one day, one of his colleagues saw the game show on TV and said, hey, you should study this.

Dr. POST: The nice thing about this show is that there are really large amounts of money at stake. You can really go home a millionaire or empty handed, of course.

(Soundbite of music)

KESTENBAUM: The reward in the U.S. game is at least a million dollars. There's one contestant. The show kicked off this week with a police officer Peter Montesanti, in a crisp, blue shirt.

Mr. PETER MONTESANTI (Contestant): I am sweating right now. This is making me more nervous than breaking down and door and going to catch bad guys.

KESTENBAUM: The game goes like this. Montasanti picks a single briefcase to hold on to. As the game proceeds, more and more of the cases are open, and he gets a better idea of how much money he might have in his briefcase. At the end of each round, a shadowy figure known as The Banker calls saying something like, quit now and I'll offer you $200,000, deal or no deal?

The contestant can take a sure thing and go home or keep playing, gambling that his briefcase contains more than the bank's offer. The audience, and Monsante's wife in this case, join in.

(Soundbite of show Deal or No Deal)

Mr. MANDEL: Deal or no deal?

Mr. MONTASANTI: No deal.

Unidentified Woman: Baby, what are you doing?

KESTENBAUM: This is the kind of emotion the economists never got in the lab. Thierry Post and his colleagues watched every edition of the show they could get their hands on, versions from Hungary, India, Turkey. They found a pattern they did not expect. When the game starts out well for the contestant and the bank keeps offering more and more money, the players typically are cautious and make a deal early.

But if the numbers go against them, contestants throw caution the wind. Thierry Post says doing poorly makes them want to take more risks.

Dr. POST: That's the basic message.

KESTENBAUM: Why do you think that is?

Dr. POST: Well, it may be for a very simple reason, but this reason is not reflected in the textbook theories. They are just willing to put more money at stake, to escape from this uneasy feeling of being a loser.

KESTENBAUM: Economists have seen hints of this behavior in other places. Post says one study shows that financial traders who lose money before lunch take more risks in the afternoon. The game show is just a particularly clear example. People, he says, are not simple, calculating machines.

So what about Peter Montasanti, the police officer who played this week? He did well early on. In the ninth round he had the option to go home with $359,000 or continue with a one-third chance of basically losing it all.

Mr. MANDEL: Deal or no deal?

Mr. MONSTASANTI: Will this change our lives? Absolutely. Am I greedy? A couple of minutes I was. Am I now? Heck no.

(Soundbite of crowd cheering)

KESTENBAUM: That's the choice Post and his colleagues would have predicted, and it's a good choice, it turns out. Montasanti's briefcase only contained $25.

David Kestenbaum, NPR News.

BLOCK: You are listening to ALL THINGS CONSIDERED. Transcript provided by NPR, Copyright NPR.

David Kestenbaum is a correspondent for NPR, covering science, energy issues and, most recently, the global economy for NPR's multimedia project Planet Money. David has been a science correspondent for NPR since 1999. He came to journalism the usual way — by getting a Ph.D. in physics first.