Pair Up to Win Tickets

ABSTRACT This study examines the strategic behavior of customers who form pairs to increase their chances of winning ticket lotteries. When ticket resale is prohibited, paired customers face the risk of duplicate winnings, requiring them to purchase surplus tickets. The study evaluates the advantages and disadvantages of such pairings and analyzes the impact of a redraw system on strategic pairing incentives. The analysis focuses on two equilibria: all‐pair (where all customers pair up) and all‐single (where no customers pair up). The key findings are as follows. First, an all‐single equilibrium occurs when the number of customers is sufficiently large or tickets are scarce. Second, holding the pairing rate fixed, a redraw system improves the payoffs of all customers (mechanical effect). Third, a redraw system strengthens customers' incentives to form pairs (strategic effect), which implies that an all‐single equilibrium is more likely to arise without a redraw system than with one. Thus, the welfare implications of redraw operate through two channels: the mechanical and the strategic effects. Fourth, if the redraw system commission is sufficiently low, the all‐pair equilibrium is more likely to exist with the redraw system than without it. Event organizers seeking to prevent strategic pair formation may therefore be reluctant to introduce a redraw system, creating a potential conflict of interest between organizers and customers.