UC@X@6F@TUGDIF 6svryqrr vrv hvhyqrpvvhxvt Marco Haan Bart Los University of Groningen University of Groningen Yohanes Riyanto Martin Van Geest National University of Singapore University of Groningen - P R E L I M I N A R Y - February 5, 2002 6i hp We analyze the BBC TV game show “The Weakest Link”, using data from 77 episodes, cover- ing 13,380 questions. We focus on the banking decision, where a contestant chooses to secure an amount of money for the eventual winner, or to risk it on a general knowledge question. In the latter case, should he answer correctly, the amount at stake increases exponentially. We show that banking decisions are not rational: a crude rule of thumb performs substantially better than the contestants’ strategies. Yet, at least to some extent, contestants do take into account their own ability and the fact that questions are progressively more difficult. 1 Haan, Los, and van Geest: Department of Economics, University of Groningen, PO Box 800, 9700 AV Groningen, the Netherlands. E-mail:
[email protected],
[email protected],
[email protected]. Riyanto: Department of Economics, National University of Singapore, 1Arts Link, Singapore 117570. E-mail:
[email protected]. D qpv A widely discussed question in economics is whether real-life economic agents really are ra- tional, in the sense that they maximize some objective function within the limits imposed by given conditions and constraints placed upon them by their environment (see e.g. Simon, 1964). Even more importantly, if agents do not behave like this, then in what ways does their behavior deviate from that rational model, and to what extent does it comply with at least some elements of rational decision-making? Empirical evidence on such issues comes primarily from the experimental literature (for a survey, see Kagel and Roth, 1995).