Neighborhood Effects on Speculative Behavior
40 Pages Posted: 31 Aug 2012 Last revised: 15 Sep 2017
Date Written: September 13, 2017
Speculative behavior plays a key role in numerous markets, but little is known about its causes. We test for neighborhood effects on speculative behavior using daily lottery sales data from 20 states in the U.S. In a sample of 160,000 retailers, lottery sales in a census block increase by $0.26, on average, for each $1 increase in neighboring blocks. We test whether this correlation is attributable to contextual effects, correlated effects, or endogenous effects. Our analysis suggests that social interaction is an important cause of speculative behavior.
JEL Classification: D10, G11, H20
Suggested Citation: Suggested Citation