Assignment of probabilities and collective action as a winning strategy in the coupon lottery

Abstract

In this article, we address the gamblers’ belief according to which, when the coupon lotteries jackpot accumulates, sales tend to increase, as there would be a greater motivation to participate in the game. Although classical economists believe that this is an irrational behavior, for being non-strategic, the study fails to rule out the validity of this belief; it finds two behaviors in gamblers that, in gaming language, would be an individual and a collective action; the first one being random, while the second one would place the odds in favor of the gamblers. The study was performed on forty lottery draws in Venezuela in the year 2000 and, even though the data are already obsolete with respect to accounting, they are not obsolete with respect to gambling, since the gamblers’ belief survives with current data. In order to contrast this belief with the empirical evidence, current statistical techniques applied to the game model were used and the a priori and a posteriori probabilities of the draws were calculated. The findings show that, paradoxically, the initial probabilities are in favor of the gamblers, but the market itself reverses these probabilities against them, thus forcing the collective action.