Winners of State Lotteries Are Often Given the Choice of Receiving

question 21

Essay

Winners of state lotteries are often given the choice of receiving their winnings either as one lump sum or as annual payments spread out over a period of twenty or more years. For example, a state lottery winner may be given the choice of receiving $1.2 million at once, or $125,000 per year for twenty years. In states where it is allowed, investors will sometimes approach lottery winners and offer to pay them a lump sum greater than the state is offering them (in this case, say, $1.4 million) in exchange for the lottery winner signing over to the investor the right to receive the annual payments. Under what circumstances might this be a good deal for both the lottery winner and the investor?

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Definitions:

Intuitors

Individuals who prefer to rely on intuition and abstract thinking rather than factual information and practical details.

Empirical Data

is information obtained through observation or experimentation, used as a basis for forming conclusions or making decisions.

Theoretical Frameworks

Structured systems of concepts and theories that provide a foundation for understanding phenomena and guiding research.

Self-efficacy

An individual's belief in their ability to succeed in specific situations or accomplish a task.