This paper explores whether a positive unexpected exogenous (unearned) wealth shock affects household structure decisions in different Spanish regions. The Christmas draw of the Spanish National Lottery is used in a natural experiment as a proxy for exogenous random variations in provincial wealth. A static and dynamic linear panel event-study design allows for control of changing economic and demographic conditions at the province level and the dynamic effects on the analyzed decisions. The evidence is consistent with families getting divorced and having children when the province in which they live experiences an unexpected increase in wealth, but no conclusive effect on wedding plans is found.

Researchers have found evidence of both hot hand and gambler’s fallacy biases in lottery number selection. Which of the two opposite effects is observed is often dependent upon the nature of the lottery game, the particular sample, the local culture of the participants, or the time transpired since the seed event. By observing hundreds of millions of lottery entries over 118 consecutive semiweekly drawings, we present evidence of both effects and their longitudinal properties. With respect to the selection of individual numbers, lottery participants tend to avoid recently selected winning numbers. This gambler’s fallacy effect diminishes and the number becomes increasingly ‘hot’ until it is selected again. With respect to winning number combinations, we found strong evidence of a small but persistent hot hand bias. This bias gradually diminishes over time, but remains detectable and highly consistent for a number of years.

A gender difference in risk preferences, with women being more averse to risky choices, is a robust experimental finding. Speculating on the sources of this difference, Croson and Gneezy recently pointed to the tendency for women to experience emotions more strongly and suggested that feeling more strongly about negative outcomes would lead to greater risk-aversion. Here we test this hypothesis in an international survey with 424 respondents from India and 416 from US where we ask questions about a hypothetical lottery. In both countries we find that emotions about outcomes are stronger among women, and that this effect partially mediates gender difference in willingness to enter the lottery.

Recent studies have identified the uncertainty effect (UE), whereby risky prospects (e.g., a binary lottery that offers either a $50 or $100 gift certificate) are valued less than their worst possible outcome (a $50 certificate). This effect has been proposed to result from “direct risk-aversion” which posits that the mere uncertainty of a lottery directly decreases its value. However, this effect may also be driven by the potential disappointment inherent in not receiving the better of the two outcomes (disappointment aversion), or the mere fact that the risky prospect is referred to as a “lottery”. The results of two experiments do not support either of these two alternatives. Specifically, the results of Experiment 1 indicate that the UE is observed even when the values of the two lottery outcomes are similar, or even identical. Experiment 2 further replicates the UE in a context in which the word “lottery” is never used (a company promotional). These results are consistent with a direct risk-aversion mechanism (Gneezy et al., 2006; Simonsohn, 2009) and suggest that the UE obtains across a number of different contexts.

Many goods are distributed by processes that involve randomness. In lotteries, randomness is used to promote fairness. When taking social risks, randomness is a feature of the process. The losers of such decisions ought to be given a reason why they should accept the outcome. Surprisingly, good reasons demand more than merely equal ex ante chances. What is also required is a true statement of the form: ‘the result could easily have gone the other way and you could have been the winner’. This rules in standard lotteries but rules out many lotteries based on merely epistemic probability.

Democratic institutions are appealing means of making publicly justified social choices. By allowing participation by all citizens, democracy can accommodate diversity among citizens, and by considering the perspectives of all, via ballots or debate, democratic results can approximate what the balance of reasons favors. I consider whether, and under what conditions, democratic institutions might reliably make publicly justified social decisions. I argue that conventional accounts of democracy, constituted by voting or deliberation, are unlikely to be effective public justification mechanisms. I conclude that the limitations of conventional mechanisms can be ameliorated through the use of lotteries instead of elections.

According to the safety principle, if one knows that p, one's belief that p could not easily have been false. One problem besetting this principle is the lottery problem – that of explaining why one does not seem to know that one will lose the lottery purely based on probabilistic considerations, prior to the announcement of the lottery result. As Greco points out, it is difficult for a safety theorist to solve this problem, without paying a heavy price. In this paper, I first reject three existing safety-based solutions to the lottery problem, due to Pritchard, Sosa, and Broncano-Berrocal. Failure of these accounts reveals that there is something crucial missing in the safety principle. By way of remedying this, I propose to integrate a safety principle with a condition regarding one's own awareness of (nearby) error-possibilities. The resulting account, as I argue, enjoys a number of theoretical advantages, including its capacity to handle the lottery problem.

How is the use of political lotteries related to party development? This article discusses the effects of a lottery-based procedure used to distribute committee appointments that was once common across legislatures in nineteenth-century Europe. The authors analyze the effects of a political lottery in budget committee selection in the French Third Republic using a microlevel data set of French deputies from 1877 to 1914. They argue that the adoption and benefit of lottery-based procedures were to prevent the capture of early institutions by party factions or groups of self-interested political elites. The authors find that partial randomization of selection resulted in the appointment of young, skilled, middle-class deputies at the expense of influential elites. When parties gained control of committee assignments in 1910, selection once again favored elites and loyal party members. The authors link lottery-based procedures to party development by showing that cohesive parties were behind the institutional reform that ultimately dismantled this selection process. Lottery-based procedures thus played a sanitizing role during the transformation of emerging parliamentary groups into unified, cohesive political parties.

This paper investigates the role of additional regulation in mitigating the ‘adverse scale effect’ associated with daily driving restrictions, which has become a popular regulatory tool used to control episodic air pollution internationally, especially in developing countries. We find that although an annual vehicle registration tax reduces the incentive to purchase additional vehicles among households whose sole purpose for doing so is to ‘cheat’ the restriction (i.e., the ‘adverse scale effect’), it does so with an external cost. The cost occurs because households whose purpose for purchasing an additional vehicle is not to cheat the restriction are given the same disincentive with the tax. We show how simple one- and two-stage lotteries can be used to not only discriminate between cheater and non-cheater households (in particular, to avoid providing a disincentive to the latter type of household), but also to provide an even stronger disincentive to the former.

Can governments increase tax compliance by rewarding honest taxpayers? We conducted a controlled laboratory experiment comparing tax compliance under a “deterrence” baseline with tax compliance under two “reward” treatments: a “donation” treatment giving taxpayers a say in the spending purposes of their payments and a “lucky” treatment giving taxpayers the (highly unlikely) chance of winning a lottery. The reward treatments significantly affected tax behaviour but not in a straightforward manner. Although female participants altered their behaviour as expected and complied somewhat more, men strongly reacted in the opposite manner: they evaded a much higher percentage of taxes than under the baseline. Apparently, there is no one-size-fits-all approach to boost tax compliance.