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`Let me dream on!' Anticipatory emotions and preference for timing in lotteries

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  • van Winden, Frans A.A.M.
  • Kocher, Martin
  • Krawczyk, Michal

Abstract

We analyze one of the explanations why people participate in lotteries. Our hypothesis stipulates that part of the value that a unit of money buys in lotteries is consumed before the actual resolution in the form of emotions such as hope. In other words, a person holding a lottery ticket may prefer a delayed resolution of risk due to positive anticipatory emotions. This conjecture is tested in an experiment with real lottery tickets. We show that our theoretical considerations may contribute to explaining empirical puzzles associated with lottery participation, timing of resolution and the spreading of drawings. More specifically, we find that a substantial number of participants prefer delayed resolution, that anticipated thrill is the main variable explaining this choice, that emotions actually experienced during the waiting period are indeed predominantly positive and correlated with predictions. Finally, we find that a great majority prefers to `spread' chances, that is, to obtain one ticket for each of two drawings rather than two for the same drawing.

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  • van Winden, Frans A.A.M. & Kocher, Martin & Krawczyk, Michal, 2010. "`Let me dream on!' Anticipatory emotions and preference for timing in lotteries," CEPR Discussion Papers 7715, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7715
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    2. Mohammed Abdellaoui & Enrico Diecidue & Emmanuel Kemel & Ayse Onculer, 2021. "Temporal Risk Resolution: Utility versus Probability Weighting Approaches," Working Papers hal-03330225, HAL.
    3. Florian Zimmermann, 2015. "Clumped or Piecewise? Evidence on Preferences for Information," Management Science, INFORMS, vol. 61(4), pages 740-753, April.
    4. Johannes Buckenmaier & Eugen Dimant & Ann-Christin Posten & Ulrich Schmidt, 2021. "Efficient Institutions and Effective Deterrence: On Timing and Uncertainty of Formal Sanctions," Journal of Risk and Uncertainty, Springer, vol. 62(2), pages 177-201, April.
    5. van Winden, Frans & Krawczyk, Michal & Hopfensitz, Astrid, 2011. "Investment, resolution of risk, and the role of affect," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 918-939.
    6. Luca David Opromolla & Michele Dell'Era, 2018. "A General Equilibrium Theory of Occupational Choice under Optimistic Beliefs about Entrepreneurial Ability," Working Papers w201822, Banco de Portugal, Economics and Research Department.
    7. Can Xu & Andreas Steiner & Jakob de Haan, 2023. "Does Economic Policy Uncertainty Encourage Gambling? Evidence from the Chinese Welfare Lottery Market," CESifo Working Paper Series 10241, CESifo.
    8. Nielsen, Kirby, 2020. "Preferences for the resolution of uncertainty and the timing of information," Journal of Economic Theory, Elsevier, vol. 189(C).
    9. Roman Kräussl & Ronald Bosman & Thomas van Galen, 2014. "Emotions-at-Risk: An Experimental Investigation into Emotions, Option Prices and Risk Perception," LSF Research Working Paper Series 14-11, Luxembourg School of Finance, University of Luxembourg.
    10. David Dillenberger & Uzi Segal, 2021. "Allocation Mechanisms without Reduction," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 455-470, December.
    11. Raman Kachurka & Michał Wiktor Krawczyk, 2020. "Lottery "strategies": monetizing players' behavioral biases," Working Papers 2020-29, Faculty of Economic Sciences, University of Warsaw.
    12. M. J. Burger & M. Hendriks & E. Pleeging & P. W. van der Zwan, 2016. "The silver linings of lottery play: motivation and subjective well-being of British lottery participants," Applied Economics Letters, Taylor & Francis Journals, vol. 23(18), pages 1312-1316, December.
    13. Yan, Jubo & Kniffin, Kevin M. & Kunreuther, Howard C. & Schulze, William D., 2020. "The roles of reason and emotion in private and public responses to terrorism," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 778-796.
    14. Schwardmann, Peter, 2019. "Motivated health risk denial and preventative health care investments," Journal of Health Economics, Elsevier, vol. 65(C), pages 78-92.
    15. Ananda Ganguly & Joshua Tasoff, 2017. "Fantasy and Dread: The Demand for Information and the Consumption Utility of the Future," Management Science, INFORMS, vol. 63(12), pages 4037-4060, December.
    16. 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.
    17. Falk, Armin & Zimmermann, Florian, 2016. "Beliefs and Utility: Experimental Evidence on Preferences for Information," IZA Discussion Papers 10172, Institute of Labor Economics (IZA).
    18. Jieyao Ding, 2011. "What Numbers to Choose for My Lottery Ticket? Behavior Anomalies in the Chinese Online Lottery Market," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_23, Max Planck Institute for Research on Collective Goods.
    19. Chen, Zhuo, 2022. "Preference for hope: A behavioral definition," Economics Letters, Elsevier, vol. 221(C).
    20. Juliane Zenker & Andreas Wagener & Sebastian Vollmer, 2018. "Better Knowledge Need Not Affect Behavior: A Randomized Evaluation of the Demand for Lottery Tickets in Rural Thailand," The World Bank Economic Review, World Bank, vol. 32(3), pages 570-583.
    21. Ambuehl, Sandro & Li, Shengwu, 2018. "Belief updating and the demand for information," Games and Economic Behavior, Elsevier, vol. 109(C), pages 21-39.
    22. Sebastian Ebert, 2021. "Prudent Discounting: Experimental Evidence On Higher Order Time Risk Preferences," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1489-1511, November.

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    More about this item

    Keywords

    Lotteries; Anticipation; Experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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