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Efficiency of Betting Markets and Rationality of Players: Evidence from the French 6/49 Lotto

Author

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  • Patrick Roger
  • Marie-Helene Broihanne

Abstract

We analyse the existence of preferred numbers on the French Lotto market and prove that this market is not strongly efficient in the sense of Thaler & Ziemba (1988). The preference for low numbers is investigated by means of stochastic dominance tests. The specific features of the French Lotto game allow us to build a simple estimate of the probability distribution of numbers actually played. The results are compared with the (highly time-consuming) maximum likelihood estimator used by Farrell et al. (2000). It is shown that the two methods give very close results. Our conclusions stress the perspectives of this study in various domains.

Suggested Citation

  • Patrick Roger & Marie-Helene Broihanne, 2007. "Efficiency of Betting Markets and Rationality of Players: Evidence from the French 6/49 Lotto," Journal of Applied Statistics, Taylor & Francis Journals, vol. 34(6), pages 645-662.
    • Handle: RePEc:taf:japsta:v:34:y:2007:i:6:p:645-662
    DOI: 10.1080/02664760701236889
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    Cited by:

    1. Roger, Patrick & D’Hondt, Catherine & Plotkina, Daria & Hoffmann, Arvid, 2022. "Number 19: Another Victim of the COVID‐19 Pandemic?," LIDAM Reprints LFIN 2022012, Université catholique de Louvain, Louvain Finance (LFIN).
    2. George Papachristou, 2004. "The British gambler's fallacy," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2073-2077.
    3. repec:cup:judgdm:v:16:y:2021:i:4:p:1039-1059 is not listed on IDEAS
    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. repec:cup:judgdm:v:11:y:2016:i:3:p:243-259 is not listed on IDEAS
    6. Brian A. Polin & Eyal Ben Isaac & Itzhak Aharon, 2021. "Patterns in manually selected numbers in the Israeli lottery," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(4), pages 1039-1059, July.
    7. Andrey Kudryavtsev & Gil Cohen & Shlomit Hon-Snir, 2013. "“Rational” or “Intuitive”: Are Behavioral Biases Correlated Across Stock Market Investors?," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 7(2), June.
    8. Phan, Thi Nha Truc & Bertrand, Philippe & Vo, Xuan Vinh & Jones, Kirsten, 2023. "Investigating financial decision-making when facing skewed distributions of return: A survey study in Vietnam," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 318-329.
    9. Tong V. Wang & Rogier J. D. Potter van Loon & Martijn J. van den Assem & Dennie van Dolder, 2016. "Number preferences in lotteries," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(3), pages 243-259, May.

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