Observed patterns of lottery play suggest that many players believe they can improve their chance of winning by adjusting their bets according to which numbers have won in recent drawings, or in response to their dreams or other portents. This skill orientation is encouraged by state lottery advertising, which tends to be misleading in other respects as well. Patterns of lottery play and the content of lottery commercials provide readily available illustrations of psychological tendencies in risky decision-making that have been documented in laboratory experiments.
In this article, we will focus our remarks on two issues of particular interest. ] First, state lotteries offer a rich source of field data for testing theories of risk-taking and decision-making under uncertainty. Second, the policies of lottery agencies, especially with regard to information they provide players about the games, raise interesting and important normative issues. Before addressing these issues, we provide a quick description of the state lottery operations. ]
1. The lottery landscape
Until 1964, lotteries were illegal in every state in this country. Today they are operated in 32 states and the District of Columbia. They are also a worldwide phenomenon: there are 100 countries where lotteries are legal. Their growth in the U.S. has been very rapid: per capita expenditures on lotteries in lottery states have increased (in 1989