Decyzje

Culture, learning and rational decision-making: evidence from a TV show

Lobão, Júlio

University of Porto

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Abstract

This paper analyzes the French and the Vietnamese versions of the TV game show “The Price is Right”, using data from 130 episodes. We focus on the bidding game, covering 434 rounds and 1,736 bids. We document that players deviate signifi cantly from what is predicted by the model of rational expectations, especially in the French population. Moreover, Vietnamese fourth bidders are found to win more frequently than their French counterparts in spite of using strategic bids less often. We attribute these results to cultural reasons. Contestants from the collectivistic, uncertainty-tolerant culture (i.e., Vietnam) are more reluctant to engage in strategic bidding than individuals from the individualistic, uncertainty-avoidant culture (i.e., France). However, Vietnamese contestants pay more attention to the estimates of the previous players and thus make a better use of the informational advantage inherent to the sequential nature of the game. Overall, our evidence suggests that culture is an important omitted variable in studies that examine cross-country differences in decision-making.

Metadata

Journal Decyzje 
Volume 2020 
Issue 34 
Issue date 12/2020 
Type Article 
Language en
Pagination 5-27
DOI 10.7206/DEC.1733-0092.144
ISSN 1733-0092
eISSN 2391-761X