Document Type
Working Paper
Publication Date
2017
College/Unit
Chambers College of Business and Economics
Document Number
97-14
Department/Program/Center
Economics
Abstract
Theoretical models of risk have attempted to explain why risk-averse individuals take unfair gambles. Using all United States’ lottery games, we find theoretical and empirical evidence that skewness of prize distributions explains why risk averse individuals may play the lottery.
Digital Commons Citation
Garrett, Thomas A. and Sobel, Russell S., "Previous studies find state lottery sales are significantly influenced by socioeconomic characteristics of the population. We extend this literature by examining how the overall expected value, the top prize, and the total combinations influence sales after controlling for these other socioeconomic factors. We perform our empirical analysis on an unparalleled set of data that includes information for 135 on-line lottery games in the United States. Our results show that sales are significantly influenced the top prize amount and odds of winning it, but that sales are not significantly affected by the expected value of the remaining lower prizes." (2017). Economics Faculty Working Papers Series. 250.
https://researchrepository.wvu.edu/econ_working-papers/250