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Prize Linked Savings Account

Add Arizona and Rhode Island to list of states that allow Banks and Credit Unions to offer PLS

Prize linked Savings accounts remain illegal in nearly half of of U.S. States due to conflict with state run lotteries.

Economics of prize linked savings
The success of the prize linked savings account can be attributed to several concepts studied in the field of behavioral economics. One such concept is the availability heuristic. Essentially people are likely to associate and have faith in things which readily come to mind, such as winning a lottery, as lottery winners are prevalent in media. Another behavioral economic concept which contributes to the success of prize linked savings is the sunk cost fallacy. This is displayed in prize linked savings as people who use these accounts will often save an increasing amount of money to up their odds in winning the prize, regardless of how small the odds are. The misunderstanding of small probabilities also can be attributed to the success of prize linked savings as it is nearly impossible for any individual to fathom odds in the millions as our day to day lives deal with quantities going no higher than a few thousand. The demand for prize linked savings accounts is seen to be highest amongst those with relatively low savings. This group of individuals is also more prone to gambling so Prize-Linked savings accounts have more potential to induce savings in this population.