A Probability Model for Strategic Bidding on “The Price Is Right”

The TV game show “The Price is Right” features a bidding auction called “Contestants’ Row” that rewards the player (out of 4) who bids closest to an item’s value, without overbidding. This paper considers ways in which players can maximize a winning probability based on the player's bidding order. We consider marginal strategies in which players assume opponents are bidding individually perceived values of the merchandise. Based on preceding bids of others, players have information available to create strategies. We consider conditional strategies in which players adjust bids knowing other players are using strategies. The last bidder has a large advantage in both scenarios because of receiving the most information from opposing players and being able to bid the minimal amount over an opponent’s bid without incurring extra risk. Finally, we measure how confidence can affect a player’s winning probability.