Re:U.S. Now Says All Online Gambling Illegal, Not Just Sport...
by andrewla on Tuesday January 15, 2019 @04:07PM
(#18915285)
Lotteries are rational for the same reason that insurance is rational.
Insurance on the face of it is irrational -- insurance companies make money, therefore buying insurance is paying a premium above what the expected reimbursement is over the lifetime of the insurance. It's a reverse lottery; the expected outlays exceed the expected returns.
What you pay the premium for in insurance is to reduce downside variance.
What you pay the premium for in a lottery is to increase the upside variance.
Re:U.S. Now Says All Online Gambling Illegal, Not Just Sport...
by larrydag on Tuesday January 15, 2019 @04:47PM
(#18915741)
yes i agree with these sentiments but the statistics involved are vastly different. The probability of a life-altering event is a lot greater than winning a lottery.
Insurance on the face of it is irrational -- insurance companies make money, therefore buying insurance is paying a premium above what the expected reimbursement is over the lifetime of the insurance. It's a reverse lottery; the expected outlays exceed the expected returns.
What you pay the premium for in insurance is to reduce downside variance.
What you pay the premium for in a lottery is to increase the upside variance.