Neuroscience

Scientists explain how the brain encodes lottery values

Neuroscientists have uncovered a key brain area in rats that encodes the value of economic choices when faced with the uncertainty of a lottery. This is the first time the causal role of frontal and parietal cortex has been ...

Medical economics

Vaccine lotteries were not a win, study finds

The use of cash lotteries to boost COVID-19 vaccination rates were not effective, according to a new study from UO economist Ben Hansen and researchers from Bentley University, the University of Colorado Denver and San Diego ...

Psychology & Psychiatry

Aussies unaware of issues caused by scratchies, lotteries and bingo

Throwing in a scratchie or lottery ticket with your weekly shop or attending a regular bingo night might seem like a bit of harmless fun, but a new study suggests people underestimate the potentially harmful effects of these ...

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Lottery

A lottery is a form of gambling which involves the drawing of lots for a prize.

Lottery is outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments. At the beginning of the 20th century, most forms of gambling, including lotteries and sweepstakes, were illegal in many countries, including the U.S.A. and most of Europe. This remained so until after World War II. In the 1960s casinos and lotteries began to appear throughout the world as a means to raise revenue in addition to taxes.

Lotteries come in many formats. For example, the prize can be a fixed amount of cash or goods. In this format there is risk to the organizer if insufficient tickets are sold. More commonly the prize fund will be a fixed percentage of the receipts. A popular form of this is the "50–50" draw where the organizers promise that the prize will be 50% of the revenue.[citation needed] Many recent lotteries allow purchasers to select the numbers on the lottery ticket, resulting in the possibility of multiple winners.

The purchase of lottery tickets cannot be accounted for by decision models based on expected value maximization. The reason is that lottery tickets cost more than the expected gain, so one maximizing expected value should not buy lottery tickets. Yet, lottery purchases can be explained by decision models based on expected utility maximization, as the curvature of the utility function can be adjusted to capture risk-seeking behavior. More general models based on utility functions defined on things other than the lottery outcomes can also account for lottery purchase. In addition to the lottery prizes, the ticket may enable some purchasers to experience a thrill and to indulge in a fantasy of becoming wealthy. If the entertainment value (or other non-monetary value) obtained by playing is high enough for a given individual, then the purchase of a lottery ticket could represent a gain in overall utility. In such a case, the disutility of a monetary loss could be outweighed by the combined expected utility of monetary and non-monetary gain, thus making the purchase a rational decision for that individual.

This text uses material from Wikipedia, licensed under CC BY-SA