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Scale economies of lotto once more

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  • George Papachristou

Abstract

Under the assumption of random number selection, higher moments of a lotto ticket payoff seem to exhibit a peculiar behaviour; variance (and probably skewness) rises up to some number of bets before approaching its limit from above. A close inspection of the 'simplest' expression obtained by means of a hypergeometric summation algorithm suggests that the payoff variance (and probably skewness) is unimodal and attains its highest at a realistic scale.

Suggested Citation

  • George Papachristou, 2009. "Scale economies of lotto once more," Applied Economics Letters, Taylor & Francis Journals, vol. 16(3), pages 319-323.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:3:p:319-323
    DOI: 10.1080/13504850601018445
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    References listed on IDEAS

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    1. Farrell, Lisa & Walker, Ian, 1999. "The welfare effects of lotto: evidence from the UK," Journal of Public Economics, Elsevier, vol. 72(1), pages 99-120, April.
    2. Walker, Ian & Young, Juliet, 2001. "An Economist's Guide to Lottery Design," Economic Journal, Royal Economic Society, vol. 111(475), pages 700-722, November.
    3. Garrett, Thomas A. & Sobel, Russell S., 1999. "Gamblers favor skewness, not risk: Further evidence from United States' lottery games," Economics Letters, Elsevier, vol. 63(1), pages 85-90, April.
    4. Joseph Golec & Maurry Tamarkin, 1998. "Bettors Love Skewness, Not Risk, at the Horse Track," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 205-225, February.
    5. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56(4), pages 279-279.
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    Cited by:

    1. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.

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