In a parimutuel lottery, players face a strategic choice situation. We investigate how rational lottery players should choose combinations of numbers. Using data from the Austrian Lotto we compare this to actual behavior. We propose a relationship between the number of tickets and the expected loss of taking part based both on theoretical and empirical findings about player behavior. Rollovers introduce exogeneous price variation allowing to estimate properties of a demand function sensitive to the expected loss.
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Paper provided by Washington St. Louis - School of Business and Political Economy in its series Papers with number
9905.
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