Thursday, October 18, 2007

Intelligent Picks of Lottery Tickets

When humans pick lottery numbers they tend to make certain mistakes
• Pick low numbers like birth dates. By Benford’s law most significant numbers in your life will be low valued (house numbers etc)
• Not picking two consecutive numbers. Consecutive numbers “look” non-random so people do not pick consecutive numbers.
• Hot hand and gamblers fallacy. They believe little plastic balls have memory.
• Other odd beliefs based on picking “shapes” dates and sports scores.
• Not picking numbers on the side of a ticket.

By analyzing how many people win when certain numbers come up you can tell how many people pick a certain number. I have done this for the Euromillions lottery and the result is here

The average return on the lottery is 50%. Bookies give about 85% and stocks on shares have an average return of greater then 100%. Non jackpot winnings are 30%. Using shunned numbers brings this value up to over 50% in our tests. This is because when you do win you share your winnings with less people. If jackpots increase by the same percentage this would bring up the average return to around 75%. The jackpot figures are estimates because jackpots are such rare events as to make calculations using them dubious.

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