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Luck vs Skill in Gambling over the Recession. Evidence from Italy

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  • S. Capacci
  • E. Randon
  • A. E. Scorcu

Abstract

We perform an econometric analysis of the gambling market in Italy over the recession (2009-2012), observing the consumption patterns in "luck" and "skill" games. We find a different effect between the early and late period of the crisis. Whereas gambling initially behaves as normal good, in the long run luck games increase with the worsening of economic conditions. Moreover, skill games are more persistent and influence luck games, but not the opposite. Skill players choose simple lottery games, but luck players cannot handle complex games. Our results provide insights on investment choices in financial markets among expert and naïve buyers.

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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp918.

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Date of creation: Jan 2014
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Handle: RePEc:bol:bodewp:wp918

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  1. Ian Walker, 1998. "The economic analysis of lotteries," Economic Policy, CEPR & CES & MSH, vol. 13(27), pages 357-402, October.
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  7. Alok Kumar, 2009. "Who Gambles in the Stock Market?," Journal of Finance, American Finance Association, vol. 64(4), pages 1889-1933, 08.
  8. Victor Matheson, 2001. "When Are State Lotteries a Good Bet (Revisited)?," Eastern Economic Journal, Eastern Economic Association, vol. 27(1), pages 55-70, Winter.
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  11. Conlisk, John, 1993. " The Utility of Gambling," Journal of Risk and Uncertainty, Springer, vol. 6(3), pages 255-75, June.
  12. Farrell, Lisa & Walker, Ian, 1999. "The welfare effects of lotto: evidence from the UK," Journal of Public Economics, Elsevier, vol. 72(1), pages 99-120, April.
  13. Ina Levitzky & Djeto Assane & William Robinson, 2000. "Determinants of gaming revenue: extent of changing attitudes in the gaming industry," Applied Economics Letters, Taylor & Francis Journals, vol. 7(3), pages 155-158.
  14. Kumar, Alok & Page, Jeremy K. & Spalt, Oliver G., 2011. "Religious beliefs, gambling attitudes, and financial market outcomes," Journal of Financial Economics, Elsevier, vol. 102(3), pages 671-708.
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