Journal of Risk and Uncertainty

, Volume 37, Issue 1, pp 57–75

Myopic risk-seeking: The impact of narrow decision bracketing on lottery play

Authors

  • Emily Haisley
    • Department of Organizational Behavior and TheoryCarnegie Mellon University
  • Romel Mostafa
    • Department of Social and Decision SciencesCarnegie Mellon University
    • Department of Social and Decision SciencesCarnegie Mellon University
Article

DOI: 10.1007/s11166-008-9041-1

Cite this article as:
Haisley, E., Mostafa, R. & Loewenstein, G. J Risk Uncertain (2008) 37: 57. doi:10.1007/s11166-008-9041-1

Abstract

In two experiments conducted with low-income participants, we find that individuals are more likely to buy state lottery tickets when they make several purchase decisions one-at-a-time, i.e. myopically, than when they make one decision about how many tickets to purchase. These results extend earlier findings showing that “broad bracketing” of decisions encourages behavior consistent with expected value maximization. Additionally, the results suggest that the combination of myopic decision making and the “peanuts effect”—greater risk seeking for low stakes than high stakes gambles—can help explain the popularity of state lotteries.

Keywords

Decision framingBracketingState lotteriesMyopic loss aversionPeanuts effectGambling

JEL Classification

C91D81I30

Copyright information

© Springer Science+Business Media, LLC 2008