November 16, 2013

MAKING THE PRICE TRITE:

Winning The Price Is Right : Slate's complete guide to better bidding through game theory--you don't even need to know the prices. (Ben Blatt, 11/12/13, Slate)

If Margie had applied a few principles of game theory, she could have planted a big kiss on Bob Barker's cheek, and maybe have gone home with ... a new car!

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.

To help future contestants avoid Margie's fate, I decided to make a handy cheat sheet explaining how to win The Price Is Right--not just the Contestants' Row segment, but all of its many pricing games. This guide, which conveniently fits on the front and back of an 8.5-by-11-inch piece of paper, does not rely on the prices of items. That may sound crazy, but there's good reason behind it. Cataloging all the possible items up for bid--from karaoke machines to Reese's Peanut Butter Cups--would be impossible, and even if you could, prices change frequently. For example, in the most recent season of Price Is Right, the Honda Accord LX was valued in different games as $22,587, $22,480 (twice), $22,934, $22,423, $22,791, and $22,841. In six of the seven times it appeared, the exact value was needed in order to win it. Memorizing prices ahead of time--even if you had a hunch you might have a shot at that Honda--has less value than you think.

Posted by at November 16, 2013 8:03 AM
  

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