Wednesday, December 07, 2005
Betting
If the odds against winning a three hundred million dollar lottery are substantially worse than for winning a three million dollar lottery, but the odds for winning a three million dollar lottery are bad to begin with, at what payout level is a purchase of a lottery ticket economically justifiable? FWIW, my guess is that the answer is: never. The probability of payout is so distant that the odds are effectively the same.
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2 comments:
Yeah, but I enjoy buying a lottery ticket just for the entertainment value--spending a few days deciding what I would do with millions of dollars is worth the small investment.
I used to think, somewhat snidely, "The cost of lottery tickets is just a tax laid upon those who can't do the math." I'm still not too fond of bettors when they pause interminably in front of me while I'm waiting to just pay for the damn paper and get out of there!, but I now accept it as an inexpensive source of hope for people who, sometimes, have very little else to hope for, and I'm willing to wait.
Some years ago I read just a tiny bit about a fellow who was stirring up a small revolution in economics with exactly that thought -- that economic decisions aren't always made by the rational person with perfect information on the market. Sometimes, they're made emotionally. He said it much more lucidly, coherently, and expansively, of course. Wish I could remember his name....
Besides, sometimes, they win!
(BTW, thanks for the definition of artichoke.)
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