Lottery Effect

The concepts of probability and chance can be hard to visualize and fully understand, so humans are overly swayed by the allure of a lottery. People frequently buy lottery tickets even if the chances of winning are tiny and the expected value is negative.

Applications

• Consider if there is a way to enter clients into a lottery for completing something. It could be a new task or providing data for your organization.

• Consider both monetary and non-monetary prizes, such as new farming equipment for agricultural areas. Lotteries can be more cost effective for organizations compared to other incentives.

Considerations

Incentives might crowd out an individual’s intrinsic motivation for doing something, so piloting and testing the effects is important.