Better Knowledge Need Not Affect Behavior: A Randomized Evaluation on the Demand for Lottery Tickets in Rural Thailand

Abstract

Despite the poor odds, low-income households in rural Thailand spend significant amounts on tickets of the Thai Government Lottery. One explanation might be that, due to lack of information about the properties of the game, the prospects of winning are upwardly biased. This would imply that an improved understanding of the actual odds should curb the demand for lottery tickets. We test this hypothesis in a randomized-controlled experiment in which we informed treated participants about the probability distribution of the Thai Government Lottery. The intervention leads to more precise perceptions of the lottery’s probability distribution. However, the willingness to pay for lottery tickets is not affected by this better knowledge. Non-cognitive aspects apparently play a more important role for participation decisions.