Lotteries, clustering, probability and herd-thinking

Coaster-only-fools-and-horses-millionaires

Nice piece in this week's Economist on Britain's love affair with gambling and lotteries in particular (HT @lauradavies24)

Lovely descriptions of how – in the face of systematic randomness (yes, past performance has no impact on future performance) we twist ourselves inside out to make choice easier – we use shorthands to pick winners (including following "expert" advice or familiar or "special" numbers) And how we ignore the simple rule that the more familiar the number the smaller the share of any (randomly-allocated) winning ticket.

As we've discussed before, herd-thinking is particularly tricky in financial decision-making – you often need to stand back and consider the facts of the matter (however hard and unnatural that is!)

But at the simplest level, those of us who play the lottery – the "numerically challenged" as some would have us – often do it because everyone we know's doing it…