Stop Buying Lotteries. Here Is Why

Let’s look at the following two games:

A: you pay $6 to flip an unbiased coin, and get $8 if it lands on head. Nothing otherwise.

B: you pay $3 to flip a biased coin. With probability 0.0001 it will land on head and you get $1000. Otherwise, you get nothing.

Game B is way more attractive than Game A, for a lower entry fee and a potentially much higher…