# General Poker Discussion Poker Forums

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#### huntse

1432 posts
Joined 11/2010

One of the best statistician/financial maths guys I've ever met explained to me that the whole point about playing the lottery is that it demonstrates that EV is not the correct objective function for evaluating financial decisions, and the correct function is marginal utility.

The reason people are rational to play the lottery is that the marginal utility of the ticket price is extremely small, whereas the marginal utility of the payoff is extremely large. So if you do an expectation-like calculation but adjusting for marginal utility, the resulting "utility expectation" of the payoff is positive.

See, dumb people know this intuitively.

#### huntse

1432 posts
Joined 11/2010

Oh and given the reported mullet I would have loved to watch the vid but it seems to be "unavailable in my region".

Edit:

They agree that allowing the computer to choose your numbers does not necessarily increase your chances of winning.

This is true but beside the point. The whole point of any strategy is to increase your expectation, not improve yoru odds. Getting the computer to pick your numbers can increase your expectation (although it's not the best strategy) over the kinds of things most people do to pick numbers, although if you pick the numbers yourself you can get the best expectation of all. The reason is that although all numbers are equally likely to win, in the event of multiple people possessing the same winning numbers in most lotteries they share the prize. So therefore you increase your expectation by picking unpopular numbers. In particular I understand that many people pick birthdays so avoiding numbers below 32 is generally a good idea.

The idea that many people have of picking balls that have been drawn the least often is under this measure a demonstrably foolish strategy for two seperate solid reasons. Firstly obviously the balls have no memory of previous draws so it doesn't improve your odds. Secondly a bunch of other deluded muppets will also try to pick these same numbers under the same misguided premise, so if you do strike lucky you'll have to split the prize multiple ways.

#### mitch

2007 posts
Joined 01/2008

The reason people are rational to play the lottery is that the marginal utility of the ticket price is extremely small, whereas the marginal utility of the payoff is extremely large. So if you do an expectation-like calculation but adjusting for marginal utility, the resulting "utility expectation" of the payoff is positive.

This is just for playing the lotto a small amount of times right? The more you play the higher your marginal utility is then X years down the track you're 10k in the hole.

#### grandmofftarkin

493 posts
Joined 04/2011

lot of nits itt. after i win i will throw a baller party for DC folks and take everyone itt out to Delmonicos.

I accept your offer in formation of this binding written contract.

2484 posts
Joined 10/2009

any small amount looks large if extended over a long enough timeframe.

but marginal utility is relative to individual circumstances imo.

if someone has retirement money banked away, spending 100% of their expendable income gambling seems fine to me. if someone is broke and falling into debt everyday, spending 1% of expendable income gambling might be bad even from a marginal utility perspective, as there is no amount that's marginal anymore.

so i don't know if i buy the marginal utility argument wholesale.

#### NixonTheGrouch

Section 9
1155 posts
Joined 11/2008

lot of nits itt. after i win i will throw a baller party for DC folks and take everyone itt out to Delmonicos.

If this party has trampoline dodge ball, I am in.

#### 2fouroffsuit

1774 posts
Joined 01/2008

lot of nits itt. after i win i will throw a baller party for DC folks and take everyone itt out to Delmonicos.

Now itt for this!

#### Matt Flynn

403 posts
Joined 07/2007

If this party has trampoline dodge ball, I am in.

i get Emil.

#### NixonTheGrouch

Section 9
1155 posts
Joined 11/2008

i get Emil.

I get the trampoline support pole.

#### huntse

1432 posts
Joined 11/2010

The marginal utility argument is for buying a single ticket for say \$1 for a less than 100mm to 1 shot at winning say \$100mm. Clearly -1 x 0.999999 + 100000000* 0.0000000001 whatever is negative but the relative marginal utilities of the payoffs are positive in weighted sum.

Buying books of tickets is just a bad idea however you look at it.

#### identifier

2141 posts
Joined 07/2008

overheard at work (where there's a pool going):

"hey, Bob won xxxxx.xx before, ask him if he will buy half our tickets for us at that place he bought his winner from."

animosity grows towards scumbag Bob.

me: pokerface

facepalm.jpg

#### TecmoSuperBowl

5553 posts
Joined 01/2009

overheard at work (where there's a pool going):

"hey, Bob won xxxxx.xx before, ask him if he will buy half our tickets for us at that place he bought his winner from."

animosity grows towards scumbag Bob.

me: pokerface

awesome

2484 posts
Joined 10/2009

The marginal utility argument is for buying a single ticket for say \$1 for a less than 100mm to 1 shot at winning say \$100mm. Clearly -1 x 0.999999 + 100000000* 0.0000000001 whatever is negative but the relative marginal utilities of the payoffs are positive in weighted sum.

Buying books of tickets is just a bad idea however you look at it.

but marginal utility of payoff is relative as well imo. what's a rational basis for this value? someone who lives off food stamps might think 5K is a huge payoff relative to their income and justify buying \$1 tickets everyday (unconsciously) using the utility theory.

#### danzasmack

2065 posts
Joined 02/2007

This was the 1st time I ever bought a lotto ticket and I must saying only binking 1 number feels worse than being told to die in a fire by a rage fish online after you moved down because you've been running bad. While you're losing.

No more lotto for me.

#### Elzibab

36 posts
Joined 04/2010

I bought a lotto ticket once - didn't win so now I'm convinced it's RIGGED!!!!