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. In a wellrknown experiment, Langer (1975) sold $1 lottery tickets to 53 office workers. Each ticket came in a matched pair. One part was kept by the purchaser, and the matched part was deposited in a box, from which the winning ticket was later drawn. The prize was the collected amount of $53. Almost all the office workers approached bought the tickets. Half the workers were handed a ticket by the experimenter, and half were allowed to choose their ticket themselves. A few days later, shortly before the lottery, the workers were approached again and on some pretext were asked how much they would require to give up their ticket. The average amount of money requested was over $8 if they had chosen their tickets and $2 if they had not. In addition, 10 of the choosers and 5 of the non-choosers initially said they wouldn't sell at all. Langer (1975) focused on the large difference between the choosers and the non-choosers, attributing it to an illusion of control... defined as an expectancy of a personal success probability inappropriately higher than the objective probability would warrant (p. 313). When one chooses tomatoes in the market, one can choose them to be better than those the vendor might randomly pick. Likewise, hypothesized Langer, participants react to choosing lottery tickets as if they can choose them to beat the odds. The higher asking price for chosen tickets reflects a higher subjective probability of winning with a chosen ticket than with a random ticket. Little was made of the fact that non-choosers required, on average, double the buying price. Indeed, though it is irrational to value chosen tickets over random tickets if one believes that the lottery is governed by chance alone, there is nothing irrational in asking more to part with a

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