Optimal lottery (Q478108)
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| Language | Label | Description | Also known as |
|---|---|---|---|
| English | Optimal lottery |
scientific article |
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Optimal lottery (English)
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3 December 2014
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Lotteries are considered that belong to the set of Pareto equilibria between a firm and a consumer with rank-dependent utility (RDU). It is shown that the continuity of the lotteries is necessary for their compatibility with RDU, and that under realistic assumptions the optimal prize structure follows a power law distribution. The theoretical results are discussed in the context of real lotteries.
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lotteries
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rational decision theory
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firm behavior
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