In today's general parlance, the term lottery is used to refer to a type of gambling where there is a small (even infinitesimally small) chance for a gain and a large (even exponentially large) chance for an individual losing. In economic parlance, a lottery is a situation that involves an uncertain payoff. Consideration of lotteries by economists has generated many questions related to decision-making behavior in humans. This entry discusses the relationship of lotteries and auctions to human decision making, particularly medical decision making.

Decision-Making Behavior

The purchase of lottery tickets has been used in decision theory to illustrate the example of individuals with risk-seeking tendencies or attitudes in economic models of decision making. This is because a risk-seeking individual may be willing to purchase a lottery ...

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