Analyzing Risky Choices: Q-Learning for Deal-No Deal

We derive an optimal strategy in the popular Deal or No Deal game show. Q-learning quantifies the continuation value inherent in sequential decision making and we use this to analyze contestants risky choices. Given their choices and optimal strategy, we invert to find implied bounds on their levels of risk aversion. In risky decision making, previous empirical evidence has suggested that past outcomes affect future choices and that contestants have time-varying risk aversion. We demonstrate that the strategies of two players (Suzanne and Frank) from the European version of the game are consistent with constant risk aversion levels except for their last risk-seeking choice.