State lottery in the lab: an experiment in external validity

Raman Kachurka, Michał Krawczyk () and Joanna Rachubik
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Michał Krawczyk: University of Warsaw

Experimental Economics, 2021, vol. 24, issue 4, No 7, 1242-1266

Abstract: Abstract In this study, we conduct a laboratory experiment in which the subjects make choices between real-world lottery tickets typically purchased by lottery customers. In this way, we can reliably offer extremely high potential payoffs, something rarely possible in economic experiments. In a between-subject design, we separately manipulate several features that distinguish the situation faced by the customers in the field and by subjects in typical laboratory experiments. We also have the unique opportunity to compare our data to actual sales data provided by the operator of the lottery. We find the distributions to be highly similar (meaning high external validity for this particular setting). The only manipulation that makes a major difference is that when the probabilities of winning specific amounts are explicitly provided (which is not the case in the field), choices shift towards options with lower maximum possible payoff and lower payoff variance. We also find that subjects generally show preference for long shots and that standard laboratory measures of risk posture fail to explain their behavior in the main task.

Keywords: External Validity; Long shot bias; State lotteries (search for similar items in EconPapers)
JEL-codes: C91 C93 D01 D81 D91 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10683-020-09696-2

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