Download This PaperA Note on Correlated Lotteries in Economic Applications
15 Pages Posted:
Date Written: December 15, 2021
Abstract
Economic models and experiments make frequent use of lotteries with only few outcomes. We provide an accessible analysis of the correlation between these lotteries as well as their dependence more generally. We characterize the joint distribution of two binary lotteries via their first three univariate moments and their correlation coefficient. As we illustrate alongside some examples, the resulting parametrization may be useful for economic modeling and experimental design.
Keywords: Binary Lotteries, Interdependence, Correlation, Concordance
JEL Classification: D01, D81
Suggested Citation: Suggested Citation
Dertwinkel-Kalt, Markus and Ebert, Sebastian and Ebert, Sebastian and Köster, Mats, A Note on Correlated Lotteries in Economic Applications (December 15, 2021). Available at SSRN: https://ssrn.com/abstract=
Do you have a job opening that you would like to promote on SSRN?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.