Reference dependence and lottery participation

descriptionPublicationkeyboard_double_arrow_right Article , Research 28 Mar 2026 Lithuania, United Kingdom English Publisher:WileyJournal:Economic Inquiry (issn: 0095-2583, eissn: 1465-7295,

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Authors: Robertas Zubrickas;

doi: 10.1111/ecin.70054

Reference dependence and lottery participation

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Abstract

Abstract We assume that lottery participants are poor relative to their target income. Reference dependence with loss aversion can render the marginal utility of income non‐monotonic in line with the Friedman–Savage hypothesis. As a result, lottery participation can be rationalized without invoking probability weighting. The theoretical implications align with recent empirical evidence on lottery spending.

Countries

Lithuania, United Kingdom

Related Organizations

Vilnius University
Lithuania
University of Bath
United Kingdom

Keywords

loss aversion, lotteries, reference dependence, Friedman–Savage hypothesis

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