In this research, we explore a unique Chinese peer to peer (P2P) online lottery gambling data (n = 388,123) and examine the rationality of Chinese online lottery gamblers. We show that Chinese online lottery gamblers are irrational in the sense that they are significantly affected by the lottery winning history of others even though this winning history is shown to be merely an exogenous random shock. Specifically, in this Chinese P2P online lottery gambling game, some of the lottery gamblers (named the proposers) propose lottery packages first, and then, other lottery gamblers (named the followers) will follow by choosing among the different packages and deciding on how much to purchase. The past lottery winning return rate of each proposer is provided as public information and calculated as the ratio between her past winning money and wager. It is shown that this past return rate is merely a random shock because winning in the past cannot predict anything about the performance in the future. However, we find that Chinese online P2P lottery gamblers are significantly more likely to join a lottery package if it is proposed by proposers with higher return rates.
Chinese lottery gambling Chinese online peer to peer gambling Gambling irrationality Online gambling Collective gambling
This is a preview of subscription content, log in to check access.
I would like to thank the seminar participants at the Fudan University, Shanghai University of Finance and Economics, Zhejiang University, and Peking University for their comments. All errors are my own.
Ayton, P., & Fischer, I. (2004). The hot hand fallacy and the gambler’s fallacy: Two faces of subjective randomness? Memory & Cognition,32(8), 1369–1378.CrossRefGoogle Scholar
Clotfelter, C., & Cook, P. (1993). The gambler’s fallacy in lottery play. Management Science,12(39), 1521–1525.CrossRefGoogle Scholar
Croson, R., & Sundali, J. (2005). The gambler’s fallacy and the hot hand: Empirical data from casinos. Journal of Risk and Uncertainty,30(3), 195–209.CrossRefGoogle Scholar
Gu, X. H., Li, G. Q., & Siu, R. C. S. (2012). Casino taxation in tourism resorts. Gaming Law Review and Economics,16(5), 274–277.CrossRefGoogle Scholar
Guryan, J., & Kearney, M. S. (2008). Gambling at lucky stores: Evidence from state lottery sales. American Economic Review,98(1), 458–473.CrossRefGoogle Scholar
Kearney, M.S. (2002) State lotteries and consumer behavior, NBER Working Paper, (9330).Google Scholar
Tang, C. S. K., & Wu, A. M. S. (2010). Direct and indirect influences of fate control belief, gambling expectancy bias, and self-efficacy on problem gambling and negative mood among Chinese college students: A multiple mediation analysis. Journal of Gambling Studies,26(4), 533–543.CrossRefPubMedGoogle Scholar
Tang, C. S. K., & Wu, A. M. S. (2012). Gambling-related cognitive biases and pathological gambling among youths, young adults, and mature adults in Chinese societies. Journal of Gambling Studies,28(1), 139–154.CrossRefPubMedGoogle Scholar
Tang, C., Wu, A., & Tang, J. (2007). Gender differences in characteristics of Chinese treatment-seeking problem gamblers. Journal of Gambling Studies,23, 145–156.CrossRefPubMedGoogle Scholar
Terrell, D. (1994). A test of the gamblers fallacy: Evidence from pari-mutuel games. Journal of Risk and Uncertainty,3(8), 309–317.CrossRefGoogle Scholar
Zheng, W. Y., Walker, M., & Blaszczynski, A. (2010). Mahjong gambling in the Chinese-Australian Community in Sydney: A prevalence study. Journal of Gambling Studies,26, 441–454.CrossRefPubMedGoogle Scholar