Buying a Dream: Alternative Models of Demand for Lotto

Existing lotto demand models utilize effective price, computed as the face value of a ticket minus the expected value of prize money per ticket, as their primary explanatory variable. By contrast, this article proposes a key role for consumption benefit or "fun" in the demand for gambling in general and lotto demand in particular. It develops an alternative model of lotto demand that focuses on the maximum possible prize. When this is tested against the traditional model using data from the U.K. National Lottery, we find that jackpot considerations exert an influence over and above that of variations in effective price.     

Dancing in the Dark: Ticketmaster's response to its Bruce Springsteen ticket crisis

Ticketmaster was presented with a crisis on February 2, 2009, when some fans trying to purchase tickets online to Bruce Springsteen concerts were redirected to Ticketmaster-owned secondary ticket distribution website, TicketsNow, and erroneously purchased tickets at a higher price than the original ticket price. The purpose of this research-in-brief is to compare Ticketmaster's response to the theories of crisis management presented in the public relations literature.     

New Price,New Hope? An Examination of the Effects of Doubling the Ticket Price in UK Lotto

The UK Lotto game was introduced in November 1994 with a standard 6/49 format and an entry fee of £1 per ticket. After several years, revenue began to fall despite extensive publicity and a variety of inducements. By 2013, nominal weekly revenue was less than half the 1995 level. In October 2013, the operator doubled the price of a ticket to £2 and made a number of changes to the pay-out structure of smaller prizes. The intent of the changes was to reverse the long downward trend in game revenue by encouraging higher jackpots and offering more pay-out opportunities for each ticket. We use draw by draw revenue and other data to evaluate how players responded to these changes and find that, while ticket sales fell dramatically, total revenue rose following the changes. Primarily this appears to have been the consequence of increased frequency of rollovers (and therefore of more frequent high jackpot draws) rather than ticket price inelasticity. However, although there was a short-term gain in revenue, the changes did not arrest, and indeed seem to have accentuated, the long-run trend decrease in the revenue generated by the game.     

DIFFERENCES IN AVERAGE PRICES ON THE INTERNET: EVIDENCE FROM THE ONLINE MARKET FOR AIR TRAVEL

Using daily ticket price quotes, this article examines whether there are systematic differences in the airfares obtained through different online travel Web sites. I find that after controlling for ticket availability and heterogeneities that affect ticket prices, there is little systematic difference in the average fares. The parity in average fares observed in 2002 data is in contrast to differences as large as 18% documented by Clemons et al. (2002), and stems in part from the fact that airlines directly compete for online travel dollars today, but did not in 1997. (JEL L2 )     

CONSUMPTION BENEFITS OF NATIONAL HOCKEY LEAGUE GAME TRIPS ESTIMATED FROM REVEALED AND STATED PREFERENCE DEMAND DATA

This paper examines the demand for hockey game trips among metropolitan and nonmetropolitan residents of Alberta, Canada. Using data on both revealed and stated preference game‐trip behavior from a telephone survey conducted throughout Alberta, we estimate the effect of ticket prices, team quality, arena amenities, and capacity on the latent demand for National Hockey League hockey games. We find that lower ticket prices, higher team quality, and additional capacity encourage attendance. In the status quo scenario, consumer surplus per game is $50 for those who had attended hockey games and about 50% less for those who had not attended games. Exploiting the stated preference data, we develop a number of other consumer surplus estimates. We also include travel costs in the estimation of the demand function and estimate the full value of the game trip considering both ticket prices and travel costs. Sold‐out arenas in Calgary and Edmonton generate annual consumption benefits of $40 and $35 million when only ticket prices are used to calculate consumer surplus (i.e., excluding travel costs). Considering the full‐price consumer surplus for the Calgary Flames of $103 per game trip, the annual consumption benefits may be as high as $82 million. (JEL R22, L83, D61)     

MULTIPRODUCT PRICING IN MAJOR LEAGUE BASEBALL: A PRINCIPAL COMPONENTS ANALYSIS

The empirical analysis of multiproduct pricing lacks clear theoretical guidance and appropriate data, which often render traditional regression‐based analyses impractical. Under these circumstances the factors underlying price variation can be inferred using a new methodology based on principal components. Analyzing ticket, parking, and concession pricing in Major League Baseball with this methodology demonstrates that general demand shifts are the primary factor, but explain only half of overall price variation. Also important are price interactions deriving from demand interrelationships between goods and attempts to maximize the capture of consumer surplus in the presence of heterogeneous demand. (JEL D40, L11, L13)     

Price perception and confirmation bias in the context of a VAT increase

This paper examines a potential confirmation bias in price perception in consequence to a real-world event and different explanations for such a confirmation bias. In a panel design conducted 2 months before and after a raise in value-added tax (VAT), 303 participants had to estimate the current prices for four products affected and four products not affected by this raise in VAT and the anticipated or recalled prices of these products. Before the VAT increase, an undifferentiated belief in strong future price increases was prevalent. After the VAT increase, a confirmation bias was found: in retrospect, participants reported price increases that were significantly higher than the official price development and in line with an undifferentiated belief in marked price increases. Two theoretical explanations for confirmation bias, i.e., the biased use of price information and the selective distortion of memory, fit the data.     

Motivational crowding out effects in charitable giving: Experimental evidence

This paper tests motivational crowding out in the domain of charitable giving. A novelty is that our experiment isolates alternative explanations for the decline of giving, such as strategic considerations of decision-makers. Moreover, preference elicitation allows us to focus on the reaction of donors characterized by different degrees of intrinsic motivation. In the charitable-giving setting subjects donate money to the German “Red Cross” in two consecutive donations. The first dictator game is modified, i.e., donors face with equal probability an ex post reimbursement or a subsequent payment. The second game is a standard dictator game. We find that after an ex post change in the price of giving of the first donation, substantially more donors with a high degree of intrinsic motivation decrease donations than subjects with a low degree of intrinsic motivation and donors who did not experience a price effect. In a replication study we find support for these results for subjects who have previously participated in at least one economic experiment.     

DEMOCRATIC INCUMBENTS AND THE 1984 PRESIDENTIAL ELECTION: A CASE STUDY

This article examines the advantages a single Democratic incumbentutilized to win reelection in 1984 despite an overwhelming victoryby Ronald Reagan at the top of the ticket in the congressionaldistrict. The incumbent won reelection because of two typesof ticket splitting: Republican-inclined voters who voted forRepublican candidates for president and U.S. Senate and splitto vote for the Democratic incumbent for Congress, and Democraticvoters who supported Democratic candidates for U.S. Senate andCongress but split to vote for Ronald Reagan for president.Ticket splitting was found to be associated with basic politicalorientation—weak Republican and independent voters splitin favor of the Democratic incumbent and were far less likelyto vote a straight ticket for either party. Support for theDemocratic incumbent was explained in nonideological terms andwas based upon high recognition and favorability, constituentservice, voting record, and personal familiarity. For the Republicanchallenger, who never achieved a high level of recognition (despitesignificant campaign expenditure), support came almost solelyfrom the most partisan Republican members of the electorateand was based simply upon the party affiliation of the Republicanchallenger.     

What drives lottery demand? Evidence from China's lottery practice

As governments draw increasing revenues from the lottery industry, it has become academically important, as well as for policy purposes, to better understand the factors that can explain lottery purchase decisions. The traditional literature uses either the expected return of each lottery ticket (effective price approach) or the jackpot size (jackpot approach) to explain the variation in lottery demand. In this article, we examine these two factors by exploiting a unique lottery game set-up in lottery practice in China. This lottery game is similar to lotteries in other countries except that there is a cap policy on the grand prize, which limits the reward of each jackpot winner. We show that this complex cap policy actually causes both the lottery effective price and the jackpot size to remain almost fixed for the majority of the time while lottery demand significantly fluctuates. The lack of variation suggests that, in China's practice, neither the effective price nor the jackpot size can explain the observed variation in lottery sales. Instead, we find that the size of the lottery rollover fits well in explaining the variation in lottery demand.     

Marital Disruption and Higher Education Among Women in the United States*

The general inverse relationship between marital disruption (separation and divorce) and educational status, commonly assumed by family sociologists, is demonstrated for both men and women using the 1/1000 sample of the 1970 United States Census. A minor, but interesting exception to this generally inverse relationship is noted for males with six or more years of college. This paper, however, focuses on a more dramatic and particularly significant deviation from the general pattern. Specifically, highly educated females – those with five or more years of college – have an especially high disruption rate compared to women with only four years of college. In fact, the disruption rate for women with five or more years of college exceeds that for women at every educational level except those who did not finish high school. The objective of this study was to see if those factors which differentiate women with four years of college from those with five or more are the same factors that differentiate between the "never disrupted" and the "ever disrupted" women with five or more years of college. The findings reveal that three variables – race, employment outside the home, and income – are associated with the likelihood that highly educated women will divorce or separate. These same variables also distinguish them from baccalaureate-level women. Four possible explanations, unrelated to the data analysis presented, are suggested for why a woman who enters graduate school significantly increases her probability of marital disruption.     

Regret aversion and the reluctance to exchange lottery tickets

The current research finds that people are willing to forego a direct material gain, if that protects them from future regrets. In two experiments participants endowed with a lottery ticket were offered to exchange their ticket for another ticket from the same lottery. Even though they could receive a bonus for exchanging, many participants chose not to do so. Experiment 1 finds that a manipulation that prevented the anticipation of regret by offering the ticket in a sealed envelope made more participants exchange their ticket. Experiment 2 finds that an increased potential of regret over not-exchanging made more participants exchange as well. In both experiments the effect of the manipulation on choices is mediated by anticipated regret. The experiments show that people are willing to forego a material gain to prevent future regrets and that the reluctance to exchange lottery tickets is (partly) caused by regret aversion.     

Wer spielt, hat schon verloren?

How actors decide to value goods is a central research question in economic sociology. The demand for lottery tickets is of particular interest because it poses a specific paradox: the expected monetary value of a ticket is about half of its purchasing price. The demand for lottery tickets thus seems to be economically irrational. Nevertheless, millions of people buy national lottery tickets every week. How can there be such a large demand in this market? On the basis of representative sruvey data, we test empirical findings using four different theoretical approaches explaining the demand for lottery tickets. We show that socially mediated states of tension and network influences are strong explanatory factors. In the conclusion we discuss implications for the sociology of markets.     

Reservation price uncertainty: Loss,virtue, or emotional heterogeneity?

One of the best-researched anomalies in behavioral sciences is loss aversion, but with strong study variations and no systematic explanations thereof. The aim here was to introduce psychophysiological correlates for loss aversion to improve behavioral predictability. In an endowment experiment, a loss versus gain framing was implemented for a virtue versus a vice product. In addition to the classical price elicitation, an area of indifference and individual price reactions were examined, while emotional arousal as skin conductance levels were continuously measured. Furthermore, various heterogeneity measures for emotions and product experience evaluations were applied directly after the purchasing decision or as a more general personality measure at the end of the study. Results show fundamental regularities of product and frame on the price or the size of indifference. Physiologically measured emotional arousal further supports the dependence of loss aversion. Vice products and a loss frame increase emotional arousal and the consumer purchase price indifference. Reported emotions, aggregated as personality factors, can partially explain the observed heterogeneity in purchase price levels and price indifferences.     

Getting Real About Food Prices

The 2008 spike in world grain prices is widely recognised to have had serious impacts on food security and poverty, but these high grain prices are commonly described as low in historical terms – an inconsistency resulting from the use of advanced‐ and global‐economy price indices in calculating real prices. This ignores the high share of food in poor people's expenditures and the indirect effects of income growth on expenditure patterns of rich consumers. Poor consumers have not experienced the same falls in real food prices and are more vulnerable to price shocks. Different price indices must be developed to take account of differences between consumer groups.     

The effects of eliminating alcohol in a college stadium: the Folsom Field beer ban

In fall 1996, the University of Colorado at Boulder instituted a ban on beer sales at football games. To evaluate the effects of the ban, the authors collected two types of data: first, they examined the effects of the ban on game-day security incidents; second, they looked at survey data from season ticket holders and students. They administered the surveys after the first two postban seasons to assess ticket holders' attitudes about the new policy. The incident data they found indicated dramatic decreases in arrests, assaults, ejections from the stadium, and student referrals to the judicial affairs office following the ban. Survey data also indicated moderately negative attitudes about the ban among students and some season ticket holders. However, all fans were likely to renew their tickets regardless of their attitudes toward the policy. The study illustrates what can be achieved when alcohol is eliminated from a setting that frequently fosters disorderly and aggressive behaviors.     

Lottery Ticket Preferences as Indicated by the Variation in the Number of Winners

Many gamblers believe that it is possible to find a strategy to beat the lottery including selecting numbers that are due to come up or looking for a bias in past numbers. In this paper, we examine sales figures and variations in the number of winners for the various prize levels of a popular Canadian lottery to detect lottery ticket preferences. It was determined that the lottery outcomes conformed well to a random outcome. No evidence of either a bias myth or due to come up myth was found. However ticket popularity indicated a marked preference for the number 7 and low numbers, and the avoidance of high numbers and adjacent numbers. In addition we found a linear and a quadratic relationship between past frequency of the numbers and ticket popularity indicating a belief in both the due to come up and the bias myths. The findings suggest strong non-random preferences in the selection of lottery numbers.     

Midlife Women in College Sexuality Classes

Abstract

In fall 1996, the University of Colorado at Boulder instituted a ban on beer sales at football games. To evaluate the effects of the ban, the authors collected two types of data: first, they examined the effects of the ban on game-day security incidents; second, they looked at survey data from season ticket holders and students. They administered the surveys after the first two postban seasons to assess ticket holders' attitudes about the new policy. The incident data they found indicated dramatic decreases in arrests, assaults, ejections from the stadium, and student referrals to the judicial affairs office following the ban. Survey data also indicated moderately negative attitudes about the ban among students and some season ticket holders. However, all fans were likely to renew their tickets regardless of their attitudes toward the policy. The study illustrates what can be achieved when alcohol is eliminated from a setting that frequently fosters disorderly and aggressive behaviors.     

A Profile of Lottery Players in Guangzhou,China

This research reports results from a survey of 1,101 lottery ticket buyers in Guangzhou, China. We found that the majority of lottery ticket buyers were young and middle-aged males with above-average-income and an education of high school/professional school or higher. Their buying behaviour usually continued for many years once they began to play. The amount of each purchase was moderate. Most reported spending less than 10% of their monthly income on the lottery each month. The majority claimed to buy lottery tickets purely for entertainment purpose while the second largest group bought lottery tickets in order to win money. The lottery business has provided more choices for meeting people's entertainment needs, and has great potential for further development. However, there were a relatively high percentage of buyers who bought lottery tickets beyond the level that was probably affordable given their income. This group should be paid special attention in order to avoid negative effects of the lottery.     

ADVERTISING AND PRODUCT QUALITY IN POSTED-OFFER EXPERIMENTS

Sellers selected both price and quality but buyers had limited information about those choices in the experiments reported here. Market efficiency was high under full information with truthful advertising of prices and qualities, but was much lower with no advertising of price or quality. Efficiency did not improve when sellers were permitted to advertise price, but not quality, and in half of these experiments "lemons" outcomes occurred. Although the range of outcomes is great, it cannot be claimed that price advertising improves efficiency when quality is unknown.