Risky Choice and the Relative Size of Stakes

Abstract

We examine framing effects by analyzing how risky choice depends on the absolute and relative size of the amounts at stake, using an extensive sample of choices from ten different editions of the large-stake TV game show Deal or No Deal. Our analyses within and across the samples suggest that risky choice is highly sensitive to the context, as defined by the initial set of prizes in the game. In each sample, contestants respond in a similar way to the stakes relative to their initial level, even though the initial level differs widely across the various editions. Amounts therefore appear to be primarily evaluated relative to a subjective frame of reference rather than in terms of their absolute monetary value.