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AndrewHickey comments on Deviant argumentation regarding Monty Hall problem - Less Wrong Discussion
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What makes you think contestants would have figured it out? People appear regularly on Deal Or No Deal and don't seem to have figured out that there is no element of skill, and that the 'deal' offered is always lower than the expected winnings if the player continues...
It isn't always lower than the expected winnings if the player continues. It is lower while the big sums are still out there. Once the possibility of winning or losing a lot of money vanishes the deal gets good because producers want the contestant off the stage so they can start a new game. They're maximizing drama.
The expected winnings are in money though, not utility, so risk aversion may be justified.
Yes.
If someone offered me a sure $100,000 or a coinflip between $250,000 and $1, I'm pretty sure I know which one I'd choose. As far as I can see you can only win the big prize if you are rich enough not to be risk averse about amounts that size.