Baseball Musings
Baseball Musings
April 22, 2008
Deal or No Deal

Peter Abraham saw Deal or No Deal for the first time yesterday:

I don't watch a lot of television beyond sports and HBO, so this was a first for me. I can't believe people actually watch this show. The entire point of the show seemed to be showing hot girls in slinky dresses. Which, you know, is fine. But can the contestants actually lose? The whole thing seemed pretty pointless. Anthropologists 1,000 years from now will determine we were a culture of idiots.

Actually, the few times I've watched the show it struck me as a good probability problem. Contestants have to balance the average payoff given the remaining money on the board versus what the bank is offering. It's the sure payoff versus the expected payoff with an element of greed mixed in.

Of course, if the show were actually marketed as a probability problem, it wouldn't sell.


Posted by David Pinto at 10:40 AM | Other | TrackBack (0)
Comments

Technically you can't lose, but it is possible to go home with the penny. To me, if you can't afford the return flight home, you didn't win.

As far as probabilities are concerned, this isn't even an expected value problem, since the bank offers are always less than the mean of the remaining amounts (barring the last round, where $100K and $10 would lead to an offer of $50K).

It's closer to the issue of assured winnings vs risk of great winnings or great failure. For this reason, it's marketed as a mental exercise in greed and personal strength.

Posted by: patsen at April 22, 2008 11:09 AM

It's totally about greed. I watch it with the kids and we laugh out loud when people who can walk home right now with 5X their annual earnings roll the dice on random luck with a board not in their favor. It's a good lesson in risk / reward for the kids.

I've told my wife if I ever were on the show I'd walk with the first six figure offer from the banker. I wonder though if I could really be that disciplined.

Posted by: COD at April 22, 2008 11:20 AM

It's not all about greed. While the bank offers are always below expected value*, they start out WELL below and gradually move up. In terms of chasing your best expected payout, it pays to keep playing. But then you have to account for individual risk-aversion. The first $100,000 won is more valuable to an individual than the next $100,000 won. It's similar to the why Evan Longoria's new contract is a big win for the Rays, but also a win for him. He needs to control his risk, while they can insure the contract by signing more of them with other young players.

*Mostly because this motivates players to keep playing, obviously.

Posted by: Sky at April 22, 2008 05:49 PM
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