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When Are State Lotteries a Good Bet (Revisited)?

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Author Info

  • Victor Matheson

    ()
    (Department of Economics, College of the Holy Cross)

Abstract

Because 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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File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume27/V27N1P55_70.pdf
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Bibliographic Info

Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 27 (2001)
Issue (Month): 1 (Winter)
Pages: 55-70

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Handle: RePEc:eej:eeconj:v:27:y:2001:i:1:p:55-70

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Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
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Web page: http://www.ramapo.edu/eea/journal.html
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Related research

Keywords: Lotteries; lottery; lotto;

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Citations

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Cited by:
  1. Matheson, Victor A. & Grote, Kent R., 2004. "Lotto fever: do lottery players act rationally around large jackpots?," Economics Letters, Elsevier, vol. 83(2), pages 233-237, May.
  2. Frank, Sascha & Rehm, Jan, 2007. "An unnoted fair bet in german state run lotteries, a short notice," MPRA Paper 5766, University Library of Munich, Germany.
  3. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: A Survey of the Literature," Working Papers 1109, College of the Holy Cross, Department of Economics.
  4. Humphreys, Brad & Perez, Levi, 2011. "Lottery Participants and Revenues: An International Survey of Economic Research on Lotteries," Working Papers 2011-17, University of Alberta, Department of Economics.
  5. Kent R. Grote & Victor A. Matheson, 2006. "In Search of a Fair Bet in the Lottery," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 673-684, Fall.
  6. De Paola, Maria & Scoppa, Vincenzo, 2014. "Media exposure and individual choices: Evidence from lottery players," Economic Modelling, Elsevier, vol. 38(C), pages 385-391.
  7. Kent Grote & Victor Matheson, 2006. "Dueling Jackpots: Are Competing Lotto Games Complements or Substitutes?," Atlantic Economic Journal, International Atlantic Economic Society, vol. 34(1), pages 85-100, March.
  8. S. Capacci & E. Randon & A. E. Scorcu, 2014. "Luck vs Skill in Gambling over the Recession. Evidence from Italy," Working Papers wp918, Dipartimento Scienze Economiche, Universita' di Bologna.
  9. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
  10. Benjamin Y. Hayden & Sarah R. Heilbronner & Amrita C. Nair & Michael L. Platt, 2008. "Cognitive influences on risk-seeking by rhesus macaques," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3, pages 389-395, June.

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