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Games of chance have an expected value [0], in this case the expected amount you can win with your ticket. Normally, this is very low, lower than the price of t
by dfxm12 3y ago
Games of chance have an expected value [0], in this case the expected amount you can win with your ticket. Normally, this is very low, lower than the price of the ticket, for sure. However, when the payout is high enough, the EV goes up. If the EV surpasses the price of a lottery ticket, that's the point where you think about "investing".
Of course, calculating EV is very hard, so people just draw a line in the sand - "if the payout is $50MM or over, I will buy a ticket, otherwise, I won't".
0 - https://en.wikipedia.org/wiki/Expected_value https://en.wikipedia.org/wiki/Expected_value
- SketchySeaBeast 3y agoI think the problem with that is it forces the data into a normal distribution when it's not actually the case, and instead it's a very large bump at one end with an incredibly long tail that drags the other tickets up? It makes sense in statistics, but as a single person with a single ticket, it's much less relevant. The EV of a ticket is over 100% of the cost, but that doesn't matter for 99.9999% of the players and only matters for the very very few with the correct numbers.
- ryandrake 3y agoAnother thing about EV that gamblers conveniently forget is that it only matters if you are repeating the experiment many times. So if the lottery odds are 1:100M, and you're only buying one ticket, your odds are effectively zero, and it doesn't matter if the payout is $200M, $500M, $1B or $10B. The casino can live with a 0.01% edge because they are conducting millions of games. You're not playing that many times.