A closer look at the substitution effects between retail trading and national lotteries

Qiqi Liang and Licheng Sun

Finance Research Letters, 2024, vol. 66, issue C

Abstract: We provide the first comprehensive study on the substitution effects between U.S. national lotteries and retail trading activities. Due to data limitations, prior studies are limited to evidence from local or international markets such as California, Taiwan, and Germany. Utilizing two unique U.S. datasets on retail trading activities, we provide convincing evidence of a substitution effect from large jackpots of U.S. national lotteries on retail trading. However, surprisingly, a reverse substitution effect from stocks exhibit significant gambling attributes on lottery participation is not observed. Thus, we uncover a puzzling phenomenon that the substitution effect only goes in one direction.

Keywords: Retail trading; Lotteries; Substitution effects; Narrow framing; Investor behavior (search for similar items in EconPapers)
JEL-codes: G02 G11 G12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324006275

DOI: 10.1016/j.frl.2024.105597

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