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Swedish Institute for Social Research, Stockholm University Working Paper Series, Swedish Institute for Social Research, Stockholm University

No 9/2006:
Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'

Gabriella Sjögren Lindquist () and Jenny Säve-Söderbergh ()

Abstract: This paper empirically investigates the rationality assumption commonly applied in economic modeling by exploiting a design difference in the game-show Jeopardy between the US and Sweden. In particular we address the assumption of individuals’ capabilities to process complex mathematical problems to find optimal strategies. The vital difference is that US contestants are given explicit information before they act, while Swedish contestants individually need to calculate the same information. Given a rationality assumption of individuals computing optimally, there should be no difference in the strategies used. However, in contrast to the rational and focal bidding behaviors found in the US, the Swedish players display no optimal behavior. Hence, when facing too complex decisions, individuals abandon optimal strategies.

Keywords: Rationality; Bounded Rationality; Field Experiments; (follow links to similar papers)

JEL-Codes: C72; C93; D81; (follow links to similar papers)

28 pages, December 28, 2006

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This paper is forthcoming as:
Sjögren Lindquist, Gabriella and Jenny Säve-Söderbergh, 'Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'', Applied Economics.



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