Anchoring in financial decision-making: Evidence from Jeopardy!

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  • Jetter & Walker, 2017 Anchoring in financial decision-making: Evidence from Jeopardy!

    Rights statement: © 2017. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

    Accepted author manuscript, 605 KB, PDF-document

    Embargo ends: 10/07/20

    License: CC BY-NC-ND Show license

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Abstract

This paper analyzes 12,596 Daily Double wagering decisions of 6,064 contestants in the US game show Jeopardy!. We exploit a situation in which a player has to, unexpectedly, wager on responding correctly to an unknown clue (known as a Daily Double clue). We find evidence consistent with the hypothesis of contestants anchoring heavily on the initial dollar value of a clue in wagering. This positive relationship remains statistically significant at the one percent level after controlling for other characteristics that may independently affect wagering decisions, such as scores, clue categories, time trends, individual Jeopardy! experience, and player-fixed effects. Exploiting within-player variation only, raising the anchoring amount by $100 translates to an increase of $29 in the wager. An alternative explanation of underlying strategic considerations appears unlikely and results are consistent throughout a number of robustness checks. Overall, these findings suggest that anchoring can play a substantial role in financial decision-making under pressure.
Peer-reviewedYes
Original languageEnglish
Pages (from-to)164-176
Number of pages13
JournalJournal of Economic Behavior & Organization
Volume141
DOIs
StatePublished - 1 Sep 2017


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