The Seat is right: Bidder heterogeneity in The Price Is Right

We study the game show The Price Is Right, where bidders compete with three opponents by submitting public bids for an item. The contestant with the bid that is closest to the actual retail price, without exceeding it, gains the item and earns the opportunity to play for more expensive prizes. Since the game is sequential, the fourth bidder has an informational advantage and a strategic advantage over her competitors. Using clustered logit regression analysis, we find further evidence in support of the bounded rationality hypothesis. We further find that bidder heterogeneity, as demonstrated by the seat choice of the first contestant announced at the beginning of the show, leads to greater winning by bidders in the fourth position.