Game Theory and ‘The Price is Right’

Many contestants fail to win anything on The Price is Right, of course. But as I watched the venerable game show that morning, it quickly became clear to me that most contestants haven’t thought through the structure of the game they’re so excited to be playing. It didn’t bother me that Margie didn’t know how much a stainless steel oven range costs; that’s a relatively obscure fact. It bothered me, as a budding mathematician, that she failed to use basic game theory to help her advance. If she’d applied a few principles of game theory—the science of decision-making used by economists and generals—she could have planted a big kiss on Bob Barker’s cheek, and maybe have gone home with … a new car! Instead, she went home empty-handed.

At Slate, Ben Blatt explains how winning on The Price is Right is really all about game theory, or strategic decision making. Here’s his example from Contestants Row, the segment on the show where contestants guess the prices of various goods—the person who guesses the closest to the retail price without going over gets to move forward in the show:

In one instance, when Margie was the last contestant to bid, she guessed the retail price of an oven was \$1,150. There had already been one bid for \$1,200 and another for \$1,050. She therefore could only win if the actual price was between \$1,150 and \$1,200. Since she was the last to bid, she could have guessed \$1051, expanding her range by almost \$100 (any price from \$1051 to \$1199 would have made her a winner), with no downside. What she really should have done, however, is bid \$1,201. Game theory says that when you are last to bid, you should bid one dollar more than the highest bidder. You obviously won’t win every time, but in the last 1,500 Contestants’ Rows to have aired, had final bidders committed to this strategy, they would have won 54 percent of the time. Instead, last bidders too often rely on their intuition, or on suggestions called out by delirious audience members. As a result, they have won only 35 percent of the time. Contestants in this sample of 1,500 who guessed a value between the highest and second-highest current guesses, as Margie did, win only 20 percent of the time. In this instance, the oven cost \$1,999. Margie lost again.

Blatt also has a pretty incredible cheat sheet to all The Price is Right games at the end of his piece. (Unrelated: When I was a kid, I made my own Plinko game by hammering nails into a board and then using checkers pieces as game discs.)

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Previously on The Billfold

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punzy (#160)

The problem with game theory is that it leaves out the “how not to be a dick” variable. It is interesting to see the games where the contestants beat the strategy, presumably with a knowledge of grocery costs.

sea ermine (#122)

This is fascinating! Although I just do not understand game theory. That and statistics for some reason, no matter how hard I try and no matter how many teachers explain it to me it just goes right over my head.

bgprincipessa (#699)

@sea ermine Same, and I actually have a BS in math. Those aspects of it were just never my strong suits.

sea ermine (#122)

@bgprincipessa Right? I love math but those areas just do not click with me. I honestly think there is a teaching style that would help me understand it but I don’t know what that would be, since every statistics (and econ! I wonder why?) teacher taught things the exact same impossible way. I’m always amazed by people that get this stuff.

I remember my high school teacher breaking up the topics so that we’d do calculus first semester and statistics the second, because he though that statistics was easy and so it should be taken when all of our finals and end of year projects were due (he was trying to be nice). It was a disaster (for me at least).

EvanDeSimone (#2,101)

We actually used a number of game shows as case studies when I took game theory in college. If every game show contestant was a rational actor game shows would be no fun at all.

swirrlygrrl (#2,398)

@EvanDeSimone Quote of the day goes to you!

EvanDeSimone (#2,101)

@swirrlygrrl I don’t know what to say! I wasn’t expecting this! I don’t have a speech prepared or anything!

jquick (#3,730)

What he suggests is really just common sense. Ive only watched a few times years ago, and kept getting frustrated with the idiotic bids. So stopped watching. The people sample they choose to be on TV aren’t too bright.

eraserface (#1,628)

Mike, does your Plinko board still exist?? I’m impressed. Plinko is obviously the best game on the show.

aetataureate (#1,310)

@eraserface PLINKO PARTY AT MIKE’S OFFICE