Skip to main content

Please enter a keyword and click the arrow to search the site

Analysing sequential game equilibrium

Subject

Finance

Publishing details

IFA Working Paper

Publication Year

1997

Abstract

The Wheel is a sequential game of perfect information played twice during each taping of the television game show The Price Is Right. This game has simple rules, and the stakes involved are high. We derive a Unique Subgame Perfect Nash Equilibrium (USPNE) for The Wheel and test its predictive ability using data from a sample of actual plays from the show. Although contestants deviate from the subgame perfect strategies on a significant number of occasions, USPNE is a good predictor of the contestants' winning frequencies. We then use the concept of Quantal Response Equilibrium (QRE) to explain contestant deviations from USPNE. We find that contestants are less likely to use their subgame perfect strategies when the cost of deviating from these strategies is relatively low. Other strategic issues, like the relative difficulties of the different contestants' decisions, are also addressed within the QRE framework

Publication Research Centre

Institute of Finance and Accounting

Series Number

FIN 252

Series

IFA Working Paper

Available on ECCH

No


Select up to 4 programmes to compare

Select one more to compare
×
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox

×

Sign up to receive our latest course information and business thinking

Leave your details above if you would like to receive emails containing the latest thought leadership, invitations to events and news about courses that could enhance your career. If you would prefer not to receive our emails, you can still access the case study by clicking the button below. You can opt-out of receiving our emails at any time by visiting: https://london.edu/my-profile-preferences or by unsubscribing through the link provided in our emails. View our Privacy Policy for more information on your rights.