Center for Economic Research, Department of Economics, University of Minnesota
Although gambling is primarily an economic activity, no single theory of the demand for
gambles has gained wide-spread acceptance among economists. This paper proposes a simple
model of the demand for gambling that is based on the standard economic assumptions that (1)
resources are scarce and (2) consumer's utility increases with income at a decreasing rate. This
model has the advantages that (1) it is based solely on changes in income, (2) is potentially
applicable to most consumers, (3) preserves the assumption of diminishing marginal utility of
income, (4) is consistent with the insurance-buying gambler, and (5) has intuitive appeal.
Nyman, J.A., (2004), "A Theory of Demand for Gambles", Discussion Paper No. 322, Center for Economic Research, Department of Economics, University of Minnesota.
Nyman, John A..
A Theory of Demand for Gambles.
Center for Economic Research, Department of Economics, University of Minnesota.
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