MELBOURNE: In an innovative departure from the norm, a new study in the International Review of Finance used data from the popular television game show, Deal or No Deal?, to explore risk aversion and economic decision-making behaviours of individuals in a high-stakes setting.

Apparently the setting of the game show provides an ideal condition for studying a range of issues relating to risk aversion. It begins with 26 suitcases of prizes ranging from 50 cents to 200,000, with most of the prize money amounting to $US10,000 and below. The contestants are asked to select one suitcase to be set aside, and then asked to continue eliminating the rest of the suitcases by choosing between the offers made by the bank, or staking their chances on an unknown amount in any particular suitcase.

The study, Deal or No Deal, That is the Question: The Impact of Increasing Stakes and Framing Effects on Decision-Making under Risk, examines the statistics from 102 episodes of the Australian version of the game show.

Findings showed that while risk aversion increased with the stakes, people were generally willing to bear risks despite very high stakes. Researchers also found that males were more willing to take risk and less likely to be swayed by a positive counter offer. While gender and age are significant determinants of risk aversion, it found, wealth was not a factor when establishing a person's risk behaviour.

"The analysis of decisions under uncertainty is fundamental to modern economics and finance," said co-author of the report, Professor Robert Faff, from the Department of Accounting and Finance at Monash University.

"By studying contestant choices in Deal or No Deal? we were able to explore risk aversion in the context of both very high and wide-ranging pay-offs. It also allowed us to answer questions including heterogeneity and how this varies with demographic characteristics such as age, wealth and gender."