Deal or No Deal Maffs

[Donachello]

Spoon is right and like surviva mentioned it's way way dependent on your own situation. Personally, if I had a great first round of picks ie. eliminating the .01, 10, 100, 500 or something I probably wouldn't be playing very long.

[spoonitnow]

Spoon is right and like surviva mentioned it's way way dependent on your own situation. Personally, if I had a great first round of picks ie. eliminating the .01, 10, 100, 500 or something I probably wouldn't be playing very long.

Bout tree fiddy.

[Penneywize]

So, Spoon sort of alluded to this but I figured I'd put in my own two cents anyway - this all has to do with risk aversion.

Essentially, the reason the "bank" doesn't just offer some number arbitrarily lower than the average of the remaining suitcases is because they are aware of the fact that individuals are risk-averse; they can offer the contestants a sum significantly lower than the expected value of the remaining brief cases and still reasonably expect that offer to be accepted.

Without getting too pedantic (hopefully) here's a graph of log utility; a classic representation of a risk-averse individual's utility function:


The gist of it is that individuals value the marginal dollar less than that of any of those previous, as Spoon (and courtie, apparently!) pointed out. The implications are pretty interesting however. On a basic level, consider why a billionaire would probably not bend over to pick up a 5$ bill if he came across one on the street one day, while poor students like myself wouldn't think twice about it.

More generally, it explains why sometimes, individuals will not accept a bet even if it is significantly +EV. Think of this: if for some reason you found yourself at the Bellagio and Doyle Brunson walked up to you and offered to give you $200,000, but also said you could put that money up against him in an all-in preflop matchup of your AK versus his QJ. You're a 65 to 35% favourite, but I would submit that most of us - those of us with incomes less than say 150k / year - would happily take the money and gtfo.

The reason for this is that the amount of utility we would gain from winning that hot-and-cold matchup, based on the graph above, is vastly lower than the amount of utility we would lose if things didn't go our way.

And so, a +EV bet will not always be accepted. From here it's pretty easy to see why, on Deal or No Deal, people often (correctly) accept offers that are significantly lower than the expected value of what's left in the briefcases.

As for the question in the original post, I'd snap accept any reasonable offer the bank made, 300k and up.

[rong]

As for the question in the original post, I'd snap accept any reasonable offer the bank made, 300k and up.

So 275k is a refusal?