Do multiple decisions lead low income citizens to purchase lottery tickets

Abstract (via Emily Haisley, Romel Mostafa and George Loewenstein)

In two experiments conducted with low-income participants, we find that individuals are more likely to buy state lottery tickets when they make several purchase decisions one-at-a-time, i.e. myopically, than when they make one decision about how many tickets to purchase. These results extend earlier findings showing that “broad bracketing” of decisions encourages behavior consistent with expected value maximization. Additionally, the results suggest that the combination of myopic decision making and the “peanuts effect”—greater risk seeking for low stakes than high stakes gambles—can help explain the popularity of state lotteries.

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16. November 2010 by Miguel Barbosa
Categories: Behavioral Economics, Curated Readings | Leave a comment

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