Marketing Letters

, Volume 21, Issue 2, pp 149–162 | Cite as

Two-stage lotteries and the value of unresolved uncertainty

Article

Abstract

We study two-stage lotteries wherein, in the first stage, the consumer may be awarded a lottery ticket for some choices and, in the second stage, some of the lottery tickets win prizes. In a series of Internet experiments, we examine store choice and repeat visits in response to immediate and two-stage lottery incentives. We show that a delayed resolution of uncertainty may dramatically increase the desired response over immediate resolution. However, this effect is due to an interaction of several potentially contradictory effects. When prizes are frequent, the effectiveness of the two-stage lottery is expected to decline.

Keywords

Reinforcement learning Lottery Secondary reinforcements Anticipation Multiple contacts 

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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Faculty of Industrial Engineering and ManagementTechnionHaifaIsrael
  2. 2.School of ManagementUniversity of Texas at DallasRichardsonUSA

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