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Comment by cataflam | Hacker News Reader

Because you shouldn't use the simulator to calculate the EV, or said differently your n=1000000 is too small.

Assuming you used the first lottery example (Mega Millions), the EV is easy to calculate directly and is -$0.66/ticket, ie -33%

The jackpot is a whole $1 of that EV! Without it, the EV is -$1.75/ticket, ie -87%, which is closer to what you got in the simulation.

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Exactly.

In short, the simulator doesn’t buy enough ticket-draws to approach the Law of Large Numbers.

But that’s also a feature of the lottery — most people overestimate their ability to win or underestimate how many lifetimes of consistent play is required to statistically win a jackpot.

I don't think people actually make that mistake. They know the chance of winning is tiny. The point is more that a non-zero chance of life changing money (plus the entertainment of fantasising about a win) is worth more to them than the cost of the ticket.

Exactly, winning the lottery is massively life changing. This is actually something I think people don't understand about the psychology of lottery. In some regards it doesn't matter if the money is $50M or $500M for most players even though that has a huge impact on the EV.

this was my approach when i lived in oregon. i played the state lottery which was something like 20x better odds, granted the jackpot was usually like $6 million after cash out, but that was still totally good in my book. it cost a buck and i got to have fun with the idea of it for a few days.

one time i get like 20 weeks in a row up front (a post-dated ticket) and i won $56 dollars or something one week. i did the odds of that happened and it was something that would happen like once every 30 years if i played weekly. i stopped after that, haha.

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