Reducing Ambiguity in Lotteries: That Knowing is Better than Wondering

Julian Conrads, Tommaso Reggiani () and Rainer Rilke

No 06-03, Cologne Graduate School Working Paper Series from Cologne Graduate School in Management, Economics and Social Sciences

Abstract: Ambiguity about the chances of winning represents a key aspect in lotteries. By means of a controlled field experiment, we exogenously vary the degree of ambiguity about the winning chances of lotteries organized to incentivize the contribution for a public good. In one people have been simply informed about the maximum number of potential participants (i.e., the number of lottery tickets released). In a second treatment this information has been omitted as in all traditional lotteries. Our general finding shows that simply reducing the degree of ambiguity of the lottery leads to a sizable and significant increase (67%) in the participation rate. This result is robust to alternative prize configurations.

Keywords: ambiguity; lottery; field experiment (search for similar items in EconPapers)
JEL-codes: C93 D03 D81 (search for similar items in EconPapers)
Date: 2015-03-24
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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