The demand for lotto: The role of conscious selection

This article presents estimates of the elasticity of demand for lottery tic kets using time series data in which there is variation in the expected val ue of a lottery ticket induced by rollovers. An important feature of our da ta is that there are far more rollovers than expected given the lottery des ign. We find strong evidence that individuals do not choose their lottery n umbers uniformly from a uniform distribution-that is, conscious selection. We use our estimates to derive the inverse supply function for the industry , and this enables us to identify the demand elasticity. We find the price elasticity to be close to unity, which implies that the operator is revenue maximizing-which is the regulator's objective.