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Decision-making in state lotteries: Half now or all of it later?

2003; Springer Science+Business Media; Volume: 10; Issue: 4 Linguagem: Inglês

10.3758/bf03196559

1531-5320

Forest Baker, Matthew W. Johnson, Warren K. Bickel,

Economic and Environmental Valuation

Many state lotteries offer players a choice between receiving roughly half of the jackpot immediately and receiving the entire jackpot over 25 annual payments. This requires players to make a decision that involves uncertainty, delay, and large amounts of real money. Archival data on lottery players’ jackpot payment decisions were collected from seven state and three multistate lotteries. Players’ jackpot payment preferences were assessed at the time of ticket purchase and after winning a jackpot. Preference for the annuity payment option significantly decreased as jackpot size increased, both at the time of ticket purchase and after winning. Furthermore, a significant proportion of winners who selected the annuity payment option at ticket purchase switched to the cash payment option after winning, whereas no winners switched from the cash to the annuity option after winning. These findings suggest that real-world choices involving large sums of money may be subject to diminishing marginal utility and probability and delay discounting.