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Testing for rational expectations in the UK National Lottery

Author

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  • David Forrest
  • O. David Gulley
  • Robert Simmons

Abstract

The concept of rational expectations has typically been assumed, without testing, in the analysis of consumer demand and market efficiency in betting markets, including betting on lottery games. Lottery games offer an excellent opportunity to test how participants process the information that is available to them. Using the UK National Lottery as our particular case, we find that participants, in general, efficiently process available information. Specifically, they act as if they can, on average, forecast the level of sales for a given drawing.

Suggested Citation

  • David Forrest & O. David Gulley & Robert Simmons, 2000. "Testing for rational expectations in the UK National Lottery," Applied Economics, Taylor & Francis Journals, vol. 32(3), pages 315-326.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:3:p:315-326
    DOI: 10.1080/000368400322741
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    Citations

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    Cited by:

    1. Ian Walker & Rhys Wheeler, 2018. "The Decline and Fall of UK Lotto," Working Papers 247054751, Lancaster University Management School, Economics Department.
    2. Martijn J. Burger & Martijn Hendriks & Emma Pleeging & Jan C. Ours, 2020. "The joy of lottery play: evidence from a field experiment," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1235-1256, December.
    3. Jen-Hung Wang & Larry Tzeng & Junji Tien, 2006. "Willingness to pay and the demand for lotto," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1207-1216.
    4. Baker, Rose & Forrest, David & Pérez, Levi, 2020. "Modelling demand for lotto using a novel method of correcting for endogeneity," Economic Modelling, Elsevier, vol. 84(C), pages 302-308.
    5. 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.
    6. Lionel Page, 2012. "‘It ain’t over till it's over.’ Yogi Berra bias on prediction markets," Applied Economics, Taylor & Francis Journals, vol. 44(1), pages 81-92, January.
    7. Alejandro Díaz & Levi Pérez, 2021. "Setting The Odds Of Winning The Jackpot: On The Economics Of (Re) Designing Lottery Games," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 168-177, January.
    8. Akira Maeda, 2008. "Optimal Lottery Design for Public Financing," Economic Journal, Royal Economic Society, vol. 118(532), pages 1698-1718, October.
    9. M. Forster & E. Randon, 2019. "Do lottery operators exploit their lottery power? Efficiency and equality considerations in optimal lottery design," Working Papers wp1135, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. Chin-Tsai Lin & Chien-Hua Lai, 2006. "Substitute effects between Lotto and Big Lotto in Taiwan," Applied Economics Letters, Taylor & Francis Journals, vol. 13(10), pages 655-658.
    11. Brad Humphreys & Levi Perez, 2012. "Network externalities in consumer spending on lottery games: evidence from Spain," Empirical Economics, Springer, vol. 42(3), pages 929-945, June.
    12. Forrest, David & Gulley, O. David & Simmons, Robert, 2000. "Elasticity of Demand for UK National Lottery Tickets," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 853-64, December.
    13. Forrest, David & Gulley, O. David & Simmons, Robert, 2000. "Elasticity of Demand for UK National Lottery Tickets," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(4), pages 853-864, December.

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