TITLE:
Effects of Payment Timing and Prior Outcomes on the Composition of Choices over Public Lotteries
AUTHORS:
David Scrogin
KEYWORDS:
Prepayment, Prior Outcomes, Lottery Choice, Choice under Uncertainty
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.4,
June
7,
2017
ABSTRACT: This note investigates payment timing and prior
outcome effects on individual choice under uncertainty using a two-year dataset containing
more than 29,000 individual discrete choices over 128 annual lotteries for
big-game (elk) hunting licenses in the southwest United States. In the first
year, lottery applicants were required to prepay for licenses, and in the second
year, the
prepayment rule was removed, resulting in a more than twofold increase in the
number of applicants. Results from nonparametric hypothesis tests indicate
significant differences in the composition of lottery choices between new and
prior applicants and between applicants who were drawn versus not drawn before
the prepayment rule was removed. The findings contribute to experimental evidence that decisions
made under uncertainty may be affected by the administrator’s choice of payment
mechanism and the subject’s gains or losses from earlier choices.