Extreme events and the cumulative distribution of net gains in gambling and structured products

Frédéric Vrins and Mikael Petitjean

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Abstract: We argue that ethical principles in advertising and market communication cannot be properly discovered and applied to gambling without a deep understanding of its probabilistic implications, in particular when extreme events are influential. We carry out a probabilistic analysis of lottery games with lifetime prizes in order to derive sound recommendations about the pertinent information that should be communicated to nudge gamblers. We propose to focus on the cumulative distribution of net gains, for which there is currently no information available to gamblers. This holds true for structured products in which extreme events matter as well.

Keywords: Extreme events; ethical communication; distribution of gains; simulations; gambling; lotteries; structured products (search for similar items in EconPapers)
Date: 2018-07-07
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Published in Applied Economics, 2018, 50 (58), pp.6285-6300. ⟨10.1080/00036846.2018.1489514⟩

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Journal Article: Extreme events and the cumulative distribution of net gains in gambling and structured products (2018)
Working Paper: Extreme events and the cumulative distribution of net gains in gambling and structured products (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02572325

DOI: 10.1080/00036846.2018.1489514

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