Decision Sciences
4 years ago

Unfair lotteries explained: Why risk-averse individuals keep playing against the odds

RePEc: Research Papers in Economics
Utility Theory and Participation in Unfair Lotteries
Patel Nitin R, Marti G. Subrahmanyam

Paper Summary

Risk averse individuals participate in unfair lotteries because they want to buy high-value items that can only be purchased in large amounts. This creates situations where people take part in these lotteries, even though they are behaving in a way that aligns with expected utility theory.

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