Behavioral Economics in Action: Virginia Lottery Ticket Auto-Renewal

In a recent Twitter post, the U.S. state of Virginia’s lottery encourages lottery players to sign up for a new auto-renewal lottery ticket purchase feature. You choose the quantity and kind of lottery tickets you wish to buy for each drawing, enter your bank or PayPal information, and the Virginia Lottery does the rest—debiting your account and supplying tickets in advance of each drawing. “Set it and forget it with auto-renewal!” implores the Virginia Lottery website. “You save time and space in your brain while never missing a drawing in the process,” it continues.

Behavioral economics studies persistent departures from economic rationality emerging both in people’s judgments (beliefs) and choices. Leaving aside the rationality of playing the lottery itself, an interesting classroom discussion could be built on asking which cognitive heuristics and biases the auto-renewal feature comes in contact with. (Example: Marginal Revolution commenter Tom T. writes, “I’m too scatter-brained. After winning the jackpot, I would forget that the auto-renewal is there, and I would keep buying lottery tickets even after I no longer needed the money.”) Does that make the auto-renewal feature unethical? If so, short of eliminating it entirely, how might the auto-renewal feature be modified to address your concerns about it? >>>

LINK: ‘Thursday assorted links (#1) (by way of Tyler Cowen at Marginal Revolution)

Cowen: Is an auto-renewed lottery ticket purchase still fun? (The polity that is Virginia.)

What do you think?

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