Then hedge funds would buy tickets. Huge jackpots attract more buyers and have more than one expected winner. And, the advertised sum is not the lump sum, but the result of purchasing annuities—the lump sum is around half that. And, taxes. It’s pretty darn hard to get an expected positive payoff even if you neglect the logarithmic utility of money—otherwise, as said, hedge funds would buy tickets.
Not that I think the sale of innumeracy should be banned. The history of the “numbers racket” shows that the demand for innumeracy is so strong that people will buy it on the black market if necessary.
One man’s modus tollens is another man’s modus ponens… From Wikipedia on Ireland’s National Lottery:
“In a 6⁄36 lottery, the odds of matching all six numbers and winning the jackpot are 1 in 1,947,792. At Lotto’s initial cost of £0.50 per line, all possible combinations could be purchased for £973,896. This left Lotto vulnerable to a brute force attack, which happened when the jackpot reached £1.7 million for the May 1992 bank holiday drawing. A 28-member Dublin-based syndicate, organized and headed by Polish-Irish businessman Stefan Klincewicz, had spent six months preparing by marking combinations on almost a quarter of a million paper playslips. In the days before the drawing they tried to buy up all possible combinations and thus win all possible prizes, including the jackpot.
The National Lottery tried to foil the plan by limiting the number of tickets any single machine could sell, and by turning off the terminals Klincewicz’s syndicate was known to be using heavily. Despite its efforts, the syndicate did manage to buy over 1.6 million combinations, spending an estimated £820,000 on tickets. It had the winning numbers on the night—but two other winning tickets were sold, too, so the syndicate could claim only one-third of the jackpot, or £568,682. Match-5 and match-4 prizes brought the syndicate’s total winnings to approximately £1,166,000, representing a profit of approximately £310,000 before expenses.”
Then hedge funds would buy tickets. Huge jackpots attract more buyers and have more than one expected winner. And, the advertised sum is not the lump sum, but the result of purchasing annuities—the lump sum is around half that. And, taxes. It’s pretty darn hard to get an expected positive payoff even if you neglect the logarithmic utility of money—otherwise, as said, hedge funds would buy tickets.
Not that I think the sale of innumeracy should be banned. The history of the “numbers racket” shows that the demand for innumeracy is so strong that people will buy it on the black market if necessary.
One man’s modus tollens is another man’s modus ponens… From Wikipedia on Ireland’s National Lottery: