Lottery balls

Life as Lottery

Editor's Note: Poor Mr. Picklebottom.

You can't win if you don't play, or so the saying goes. But with something known as a “regret lottery,” you can win if you don't play. And therein lies the motivation.

Imagine you own a house in Anytown, USA, a popular community among academics and members of the witness protection program.  A month before property taxes are due, the town enters every homeowner in a lottery. The jackpot would cover your next property tax installment. The day after the payment deadline, the town emails everyone the winning number.

The catch: If the winning number is your number, you can only collect the winnings if you paid your property taxes.

You’ve just experienced a regret lottery.

Since regret lotteries communicate results to every player, we’ll know when we’ve lost, when we’ve won and when we could have won if we’d only played. It’s that “could have won” state that hurts. The closer we feel to winning, the more regret we’ll feel when we lose, and that’s what makes regret lotteries work. To avoid that “could have won” state, people will pay their taxes, or take their medication, or do whatever the regret lottery was designed to get us to do.

As Dan Ariely puts it, “Our happiness frequently depends not on where we are at the moment, but how easily we perceive we might be elsewhere, or in another, better situation.”

In the Netherlands’ National Postcode Lottery, everyone who lives within the winning postal code AND also bought a lottery ticket wins a large cash prize. What if you live in the winning location and didn’t buy a ticket? Then some of your neighbors are now millionaires, and you’re not. That kind of loss is hard to accept. Ask Helene DiGier, who sued for the right to win a game she didn’t play.

Regret lotteries can be effective even with smaller amounts on the line. Every other year, the Duke University library uses a student survey to get feedback. In 2016, they tested a regret lottery as an incentive for survey completion, offering a chance to win a $75 gift card to every student who filled out the survey. The library received more responses in the first hour than they had in all of 2014.

“Our happiness frequently depends not on where we are at the moment, but how easily we perceive we might be elsewhere, or in another, better situation.” – Dan Ariely

Iterative regret lotteries work the same way, but offer smaller prizes for daily behaviors, such as taking medication or exercising. Repeating a lottery every day puts a few new twists on the outcome.

First, it provides an opportunity for learning, in a way that’s not necessarily good. If the chance of winning a bit of cash is regularly nudging you to take your pills, exercise or quit smoking, the repetition can teach you something you’d conveniently forgotten: You probably won’t win.

After a certain number of losses, you may ditch the desired behavior because you haven’t realized a payoff. “Why bother working out today? I won’t win anything anyway.”

Second, the size of the payoff may matter too, but not how we might think. Bigger isn’t necessarily better. A 2014 study required people to send researchers daily measurements of blood sugar, blood pressure and weight. People were split into three groups: No incentive, a “low incentive” regret lottery and a “high incentive” regret lottery. Each lottery offered a couple of ways to win, but the maximum daily payout didn’t exceed $50 (low group) or $100 (high group).

The lotteries lasted 12 weeks and both groups had impressive participation — about 80 percent, compared with 58 percent of the control group. Things got even more interesting after the lotteries ended, but the study continued. The low-lottery group’s participation dropped only slightly, but the high-lottery group gave up. By the sixth month, 62 percent of the low-lottery group was still sending daily measurements, compared with about 30 percent of the high-lottery group (no better than the no-incentive group).

The researchers suggest that the high-lottery group was motivated largely by extrinsic rewards (money) and not intrinsic ones (better health). So when the chance to win money disappeared, so did their motivation.

The high-lottery group also experienced the negative contrast effect: If an incentive is too large, its loss feels bad enough that we stop the behavior associated with it. (It’s like giving your kid $100 a month to clean her room, and then stopping after a year. You’re going to find something gross under the bed again.) That’s the last thing you want if you’ve set up a regret lottery to improve people’s health or taxpaying habits.

As alternatives, Imas, Lame & Wilson (2017) suggest offering a small, constant payment to entice people to practice the same behavior regularly, or setting up a single regret lottery that requires committed participation over a period of time. (Work out five times a week for a month, and you’re in.)

The potential benefits of regret lotteries are endless, but your organization can’t win if it doesn't play.

How might a regret lottery mesh with, for instance, a rewards program? To increase employee participation in a health risk assessment, one employer entered employees into teams of about six into a weekly regret lottery. If the team was chosen as the winner, each member who completed an assessment received a cash prize. As a bonus, the prize was higher if at least 80% of the team followed through. Imagine not just missing out on your own winnings, but also being the one who cost your colleagues that 80% bonus. Now imagine the motivating impact of avoiding that scenario. Similarly structured lotteries could work for sales teams (hitting a sales goal), project teams (marking milestones) customer service teams (resolving issues), or almost any other employee group.  It could work for individuals too. “You might win the boss's seats to local sporting match -- Go Locals! -- or cultural event -- Go Culture! -- but only if you’ve hit your goals - Go Goals!”

Or try a regret lottery to increase survey participation. Consider the regret lottery impact of these two different retail scenarios:

  1. “Thanks for your purchase, Mr. Picklebottom. Now just go to our website and fill out our survey for a chance to win $500!”
  2. “Congratulations, Mr. Picklebottom! Your name has been chosen for a chance to win $500! All you have to do now is complete a quick survey. Here’s the website.”

For one-time or periodic decisions, regret lotteries can nudge people in the preferred direction—whether that's signing up for automatic retirement account investments, donating to a nonprofit or filling out a survey. But for repeated choices, a regret lottery's negative consequences may outweigh the positive ones. To minimize the chances of that happening, keep the rewards low enough to allow intrinsic motivation to build over time, or, if teams of employees are involved, include a “twist” on the lottery that capitalizes on positive peer pressure.

The potential benefits of implementing regret lotteries are endless, but your organization can't win if it doesn't play.

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