Order the answer to: Tennessee just instituted a state lottery. The initial jackpot i

Best Writers business-economics Order the answer to: Tennessee just instituted a state lottery. The initial jackpot i

business-economics

Order the answer to: Tennessee just instituted a state lottery. The initial jackpot i

Question Tennessee just instituted a state lottery. The initial jackpot is $100,000. If the first week yields no winners, the next week’s jackpot goes up, depending on the number of previous players who placed the $1 lottery bets. The probability of winning is one in a million (1 – 10-6). What must the jackpot be before the expected payoff is worth your $1 bet? Assume that the state takes 60% of the jackpot in taxes, that no one else is a winner, and that you are risk-neutral (i.e., you value the lottery at its expected value).
Subject business-economics
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