Reducing ambiguity in lotteries: evidence from a field experiment

ABSTRACT

Ambiguity about the chances of winning represents a key aspect in lotteries. By means of a controlled field experiment, we exogenously vary the degree of ambiguity about the winning chances of lotteries organized to incentivize the contribution for a public good. In one treatment, people have been simply informed about the maximum number of potential participants (i.e. the number of lottery tickets released). In a second treatment, this information has been omitted as in all traditional lotteries. Our general finding shows that simply reducing the degree of ambiguity of the lottery leads to a sizable and significant increase (67%) in the participation rate. This result is robust to alternative prize configurations.

KEYWORDS:

• Ambiguity
• lottery
• field experiment

JEL CLASSIFICATION:

• C93
• D03
• D81

Acknowledgements

We thank Louis Eeckhoudt, Felix Kölle, Minkia Martiale and Sarah Grace See for comments and suggestions.

ORCID

Tommaso Reggiani http://orcid.org/0000-0002-3134-1049

Notes

¹ Another way to motivate customers to complete a survey is analysed by Gneezy and Rey-Biel (2014) who compare contingent with noncontingent incentives.

² Aside from the indication of demographics, the survey contains questions on personal values (Schwartz 1992) and on possible motives to volunteer (Clary et al. 1998).

³ In this practical case, the effort exerted in order to fill in the survey represents the price of the lottery ticket. Since the hyperlinks to access the survey were individualized for each different invitation, it was not possible to fill in the online survey more than once in order to increase the probability of winning. For this reason this lottery can be considered a raffle, see Morgan (2000).

⁴ Excluding from the pool all subjects approached for the previous HA/SP lottery.

⁵ Excluding from the pool all subjects already involved in the contemporaneous HA/SP lottery (see Table 2).

⁶ Excluding from the pool both subjects involved in the previous HA/SP and HA/MP lotteries and the ones exposed to the contemporaneous LA/SP treatment (see Table 2).

⁷ We received no complaints or requests of clarification either during the field phase of the experiments or after the assignment of the lotteries rewards.

⁸ About the relative lower performance of multiple prizes lotteries/auctions, see Faravelli and Stanca (2012), Lange, List, and Price (2007) and Landry et al. (2006).

Additional information

Funding

Financial support from the Deutsche Forschungsgemeinschaft through grant ‘TP3 Design of Incentive Schemes within Firms: Bonus Systems and Performance Evaluation’ (sub-project of the DFG-Forschergruppe ‘Design and Behavior’) and through the Leibniz-Award to Axel Ockenfels is gratefully acknowledged.