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Because of the payout model (all and only winning tickets split a fixed prize) the EV for buying multiple randomly distributed tickets and uniformly distributed
by femto113 8y ago
Because of the payout model (all and only winning tickets split a fixed prize) the EV for buying multiple randomly distributed tickets and uniformly distributed tickets aren't the same. Consider if you were the only one playing a lottery with 100 combinations. If a ticket costs $1 and the jackpot is $100 one random ticket has an EV of $1. However if you buy 100 random tickets on average you'll only cover about 64 numbers, so your EV per ticket is just $.64, whereas if you buy uniformly distributed tickets the EV is constant up to the number of combinations. If you imagine raising the prize to $200 and that two people are playing this lottery and one buys 100 random tickets and the other buys every combination the random player has about a 36% of getting nothing, and will share the jackpot the remainder of the time. Overall the uniform player has an expectation that's almost twice as high as the random player, and makes a pretty strong case for buying every ticket if you're the only one that does it. It falls apart if you have to compete against another uniform player.
- cycrutchfield 8y agoWho in their right mind would buy 100 tickets chosen at random _with replacement_ in your scenario?
- firethief 8y ago100 people
- femto113 8y agoExactly. In fact in practice they do an even worse than random job since many people pick non-random numbers like birthdates or the number of kids they have. Any uniform purchasing strategy would probably have better EV from not buying any of the most popular combinations.