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The "Gambler's Fallacy" in Lottery Play

  • Charles T. Clotfelter
  • Philip J. Cook

The -gambler's fallacy- is the belief that the probability of an event is lowered when that event has recently occurred, even though the probability of the event is objectively known to be independent from one trial to the next. This paper provides evidence on the time pattern of lottery participation to see whether actual behavior is consistent with this fallacy. Using data from the Maryland daily numbers game, we find a clear and consistent tendency for the amount of money bet on a particular number to fall sharply immediately after it is drawn, and then gradually to recover to its former level over the course of several months. This pattern is consistent with the hypothesis that lottery players are in fact subject to the gambler?s fallacy.

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File URL: http://www.nber.org/papers/w3769.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3769.

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Date of creation: Jul 1991
Date of revision:
Publication status: published as Management Science, December 1993
Handle: RePEc:nbr:nberwo:3769
Note: PE
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  1. Rebecca Morrison & Peter Ordeshook, 1975. "Rational choice, light guessing and the gambler's fallacy," Public Choice, Springer, vol. 22(1), pages 79-89, June.
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