When Are State Lotteries a Good Bet (Revisited)?
AbstractBecause the jackpots in lotto games are potentially unlimited, it has been speculated that these lotteries may have a positive expected return for high jackpots. While most previous work has concluded that the lotto rarely presents a player with a positive expected return, this paper modifies previous payoff models and finds several cases where a positive expected return has existed. Furthermore, contrary to the existing literature, purchasing every possible number combination for a particular lottery drawing increases the expected return to the purchaser and leads to further instances where state lotteries provide a fair bet.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 27 (2001)
Issue (Month): 1 (Winter)
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Lotteries; lottery; lotto;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
- H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
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- Victor A. Matheson & Kent R. Grote, 2003. "In Search of a Fair Bet in the Lottery," Department of Economics Working Papers 2003-16, Department of Economics, Williams College.
- Victor Matheson & Kent Grote, 2004. "In Search of a Fair Bet in the Lottery," Working Papers 0401, College of the Holy Cross, Department of Economics.
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