Reference dependence and lottery participation
Year: 2026
Type: article
Abstract: We assume that lottery participants are poor relative to their target income. Reference dependence with loss aversion can render the marginal utility of income non‐monotonic in line with the Friedman–Savage hypothesis. As a result, lottery participation can be rationalized without invoking probability weighting. The theoretical implications align with recent empirical evidence on lottery spending.
Source: Economic Inquiry
DOI: 10.1111/ecin.70054
Author: Robertas Zubrickas
Institutions: Vilnius University, University of Bath
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,400
OpenAlex ID: W7142942516