Why are people reluctant to exchange lottery tickets?

Abstract

Students were given lottery tickets and then were asked to exchange their ticket for another one, plus a small monetary incentive. Less than 50% agreed. In contrast, when given pens, and the same exchange offer, over 90% agreed. Experimental control rules out that the reluctance to exchange lottery tickets results (a) from overestimation of the winning probability of one's own ticket; (b) from a concern that the ticket, once exchanged, might win in the hands of another, (c) from an overly low transaction cost; (d) from "paranoia" due to the bizzarreness of the social situation we created; (e) from "bonding" to the ticket. Rather, the possibility for ex post regret that exists when exchanging lottery tickets, but not pens, underlies this reluctance. The notion of regret is broader than previously supposed.

Picture yourself: Self-focus and the endowment effect in preschool children

“…Very low trading rates were observed in both groups (~10%), despite both objects being equally attractive (Knetsch, 1989), demonstrating that ownership of an object increases our subjective valuation of it. This effect has been replicated numerous times and manifests both as a reluctance to trade and as a difference between buying and selling prices (Hoorens et al, 1999;Carmon & Ariely, 2000;Bar-Hillel & Neter, 1996).…”

Another look at why people are reluctant to exchange lottery tickets.

“…First, people may believe that their own ticket is luckier than other tickets (Langer, 1975). Bar-Hillel and Neter (1996) showed that this belief is not commonly held. Second, people may believe that the act of exchanging their ticket will change the likelihood that it will be drawn.…”

“…Indeed, Bar-Hillel and Neter (1996) conducted a systematic program of research on this question and concluded that the reluctance to trade lottery tickets cannot be attributed to an "overestimation of the winning probability of one's own ticket" (p. 17). In the most direct test of this idea, they asked participants, "Are the chances for your ticket to win the lottery higher, lower, or equal to the chances of any other lottery ticket?"…”

“…People are indeed concerned about avoiding regret (Bar-Hillel & Neter, 1996). But might they also believe that if they exchange their ticket, it would become more likely to win?…”

Regret as autobiographical memory

“…Behavioural studies also support this scenario data. For example, Bar-Hillel and Neter (1996) conducted a series of studies in which students were given lottery tickets and then asked if they would be prepared to exchange them for new ones plus a small monetary bonus. Despite an expressed belief that their tickets had very little chance of winning, the majority of participants were reluctant to exchange them nonetheless, because of the regret they anticipated feeling if the original ticket turned out to be a winner.…”