The Lottery and Risk-Seeking Behavior
Lottery is a form of gambling in which numbers are drawn to win prizes. It is typically regulated by state governments and a portion of the proceeds are often donated to charities. Modern lotteries are most frequently associated with drawing numbers for sports events, although they can also be used in other ways, such as determining a housing unit assignment or choosing jurors from lists of registered voters. A lottery must be run in order to ensure that the winners are randomly selected and are not favored or discriminated against.
In the U.S., about half of adults buy at least one lottery ticket a year. The players tend to be lower-income, less educated, and nonwhite. They pay a small amount to play, and their winnings, however unlikely, can change their lives. But it’s not just the improbable hope that draws them in; it’s the feeling that they are giving themselves a chance to break out of a cycle of poverty and inequality.
The history of lottery traces back to ancient times, when Romans used the drawing of lots to distribute goods at dinner parties. Later, in medieval Europe, public lotteries were held to raise money for town fortifications or to help the poor. The first European lotteries in the modern sense of the word appeared in 15th-century Burgundy and Flanders, with towns offering cash prizes for tickets that were drawn by hand or machine.
The purchase of a lottery ticket cannot be accounted for by decision models that use expected value maximization, since the ticket is more expensive than the possible prize. However, more general utility functions can account for the appeal of the lottery and its effect on risk-seeking behavior.