What is a Lottery?
Lottery is a form of gambling in which numbers are drawn to determine a prize winner. The word lottery comes from the Latin ‘to distribute by lot’ and the practice has roots in ancient times with biblical references to the division of land among the people of Israel, and the emperors’ distribution of slaves, property, and military conscription. Modern lotteries include those in which a person may win a prize for playing a game, a commercial promotion in which property is given away by chance, or a public process that selects jury members or participants in government proceedings.
In colonial America, private lotteries were common, and helped finance roads, libraries, churches, colleges, canals, and bridges. Lotteries were also used to raise money for wartime ventures. The Continental Congress voted to establish a lottery in 1776 as a means of raising funds for the American Revolution, but this scheme was abandoned. Public and private lotteries continued, however, as a method of collecting voluntary taxes and financing both business and public ventures.
Lottery purchases can be accounted for by decision models based on expected utility maximization, as long as the entertainment value and non-monetary gain obtained by purchasing a ticket is greater than the disutility of a monetary loss. The curvature of the utility function can be adjusted to capture risk-seeking behavior, which would explain why some individuals choose to purchase a lottery ticket. Other explanations for lottery purchases may include the thrill of winning and the desire to indulge in a fantasy of becoming wealthy.