Can Boundedly Rational Agents Make Optimal Decisions? A Natural Experiment

The television game show The Price Is Right is used as a laboratory to test consistency of suboptimal behavior in an environment with substantial economic incentives. On the show, contestants compete sequentially in two closely related games. We document that contestants who use transparently suboptimal strategies in the objectively easier game use the optimal strategy almost all of the time in the game that is much more difficult to solve. Further, there is no consistency in the mistakes that are made in the two games. One cannot predict, conditional on play in one game, whether play in the other game will be optimal. The results have implications for the consistency of behaviorally based economic theory that relies on evidence derived in a laboratory setting.