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State lottery in the lab: an experiment in external validity

Published online by Cambridge University Press:  14 March 2025

Raman Kachurka ,
Michał Krawczyk Open the ORCID record for Michał Krawczyk [Opens in a new window]  and
Joanna Rachubik
Raman Kachurka
Affiliation:
Faculty of Economic Sciences, University of Warsaw, Warsaw, Poland
Michał Krawczyk*
Affiliation:
Faculty of Economic Sciences, University of Warsaw, Warsaw, Poland
Joanna Rachubik
Affiliation:
Faculty of Economic Sciences, University of Warsaw, Warsaw, Poland
*
[email protected]
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Abstract

In this study, we conduct a laboratory experiment in which the subjects make choices between real-world lottery tickets typically purchased by lottery customers. In this way, we can reliably offer extremely high potential payoffs, something rarely possible in economic experiments. In a between-subject design, we separately manipulate several features that distinguish the situation faced by the customers in the field and by subjects in typical laboratory experiments. We also have the unique opportunity to compare our data to actual sales data provided by the operator of the lottery. We find the distributions to be highly similar (meaning high external validity for this particular setting). The only manipulation that makes a major difference is that when the probabilities of winning specific amounts are explicitly provided (which is not the case in the field), choices shift towards options with lower maximum possible payoff and lower payoff variance. We also find that subjects generally show preference for long shots and that standard laboratory measures of risk posture fail to explain their behavior in the main task.

Keywords

External ValidityLong shot biasState lotteries

JEL classification

D01: Microeconomic Behavior: Underlying Principles C91: Laboratory, Individual Behavior C93: Field Experiments D81: Criteria for Decision-Making under Risk and Uncertainty D91: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Type
Original Paper
Information
Experimental Economics , Volume 24 , Issue 4 , December 2021 , pp. 1242 - 1266
Copyright
Copyright © 2021 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-020-09696-2) contains supplementary material, which is available to authorized users.

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