Wednesday, January 17, 2007

Musings on The Price is Right

One of the TVs in the employee dining room had on The Price is Right this morning. One nuance of the show is that you get heavily penalized for overestimating the price of items. For example, you can't get passed the initial round or win the final showcase showdown if you've guessed over the actual retail value. I started wondering why they had this rule.

My first thought was to avoid a tie. If the value is $2 and one person guesses $1 and the other guesses $3, they'd both be off by exactly $1. However, this situation would be very rare and they could just stipulate that the in the event of a tie, the contestant with the lower (or higher) guess would be declared the winner.

My next thought has to do with anchoring and adjustment heuristic. Basically, if players have incentive to underestimate the value of the prizes, they will always be pleasantly surprised by the outcome. You wouldn't want someone guessing his or her final showcase is valued at $25,000 to then "win" a prize valued at only $10,000. It makes the prizes seem bigger and better than they are.

This theory seemed plausable enough and I couldn't find any holes in the logic, so I stopped considering other options and starting thinking about why the heck Bob Barker hasn't retired already....

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