What investors can learn from ‘Deal or No Deal’

Australians are generally willing to bear risks despite very high stakes – and males are more willing to take risks, according to a study that examined the choices of contestants on Deal or No Deal from an economic decision-making point of view.

The report’s authors say the show, which begins with 26 suitcases of prizes ranging from 50 cents to $200,000, provides ideal conditions for studying how people deal with taking economic risks.

While risk aversion increased with the stakes, people remained willing to bear risks even when the stakes were very high, the study found. The study, published in the International Review of Finance, finds males are not only more likely to take risks but are also less likely to be swayed by a positive counter-offer.

While gender and age are significant determinants of risk aversion, wealth is not a factor when establishing a person’s risk behaviour, it adds. Report co-author Robert Faff from Monash University says the analysis of decisions under uncertainty is fundamental to modern economics and finance, so watching the decisions made during 102 episodes of Deal or No Deal provides key insights into risk-taking.