This paper outlines the conditions under which a state-run lottery yields an expected return greater than its costs. The analysis considers the possibility of multiple winner, the fact that lottery winnings are typically paid out over a 10 to 20 year span, the taxation of lottery winnings as...

This paper explains the economics of gambling behavior within a framework which explicitly incorporates agents' models and attitude toward risk. Within this framework, we characterize the formation of subjective probabilities, the equilibrium in a pointspread gambling market, and how the...