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Finding good bets in the lottery, and why you shouldn’t take them. (English) Zbl 1200.00014

Summary: Everyone knows that buying lottery tickets is a bad investment. But do you know why? You will most likely lose your dollar, but there is a small chance that you will win big. In some lottery drawings, your expected rate of return is spectacularly high. Do you know how to identify a drawing that has a positive expected rate of return? When you find one, how do you decide if it is a good investment? In a sense, such a drawing is a caricature of a typical investment, for which both the risks and the rewards are more modest. In general, how should an investor compare such alternatives? And can the lottery ever be a good investment?

MSC:

00A09 Popularization of mathematics
97K50 Probability theory (educational aspects)
91A60 Probabilistic games; gambling
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