Hey Adam - what does "funding a jackpot via insurance" mean? Do you pay out $10m jackpots now or only when you hit a certain scale?
Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
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Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#112Earlier quoted context omitted.
The regulators actually lifted this cap recently, so it's now unlimited most places. But this is temporary from covid. They wanted people to have more flexible access to their funds given given the macro environment.
My understanding is that the Federal Reserve seems to intend the lifting of the cap to be essentially permanent, despite the cap being lifted in the form of an "interim final rule". See the third question at the Fed FAQ here: https://www.federalreserve.gov/supervisionreg/savings-deposi...
Oh cool I did not know that. Thanks for bringing this up
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#113Hey Adam - what does "funding a jackpot via insurance" mean? Do you pay out $10m jackpots now or only when you hit a certain scale?
We pay premiums to an insurance co. and in the event someone wins the jackpot, the prize payment would come from them, not from Yotta.
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#114Earlier quoted context omitted.
Yeah exactly. Almost any grand prize you see is really the sum of the annuity value. We kind of have to use the same practice in order to be competitive, and we think a lot of people assume it's the annuity value sum as well. ( https://www.magnifymoney.com/blog/banking/powerball-annuity/ )
You should definitely rethink this. You're a savings account. Be honest (read: obvious and clear) with your customers.
It’s common knowledge that jackpots have an annuity or a lesser lump sum, that’s how lotteries work already. This is really just a way to gamify savings as a lottery, I think it’s a great idea and may sign up. I have a really low yield savings account right now anyway and was planning to sign up for an online high yield account.
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#115FNB, a bank in South Africa, used to do something similar. It was called the Million a Month account. If I recall the South African Supreme Court shut it down because it was considered a lottery
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#116I want to believe in it, but the skeptic in me wants to ask how this isn't a vehicle for the rich to get richer: If every $25 gets you a ticket, then someone with a $50 account has far worse odds than someone with a $5000 account.
Of course, the $50 person has nothing to lose, but there's also a sense of dejection.
Perhaps a cap on the total number of tickets an account can have?
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#117This is an awesome idea, and I intend to try it out. I am a mathematician, and at the same time I can't resist the temptation to purchase the occasional lottery ticket. What most people miss about the lottery is that there can be utility to variance - the opposite of ennui. Have you guys read The Lottery in Babylon https://en.wikipedia.org/wiki/The_Lottery_in_Babylon
As a mathetmatician how can you ever justify participating in a lottery where there is a possibility of no-winners or shared winners. It just destroys any hope of any positive EV.
Life is not all about EV. Especially not monetary EV.
I own my home. It's an objectively bad investment (my tech stocks sure appreciated more than a home I bought in 2008 before the crash :) But I like the feeling that comes with owning a home.
I go out for dinner. (Well, used to). It's objectively a waste of time and money, but I still like the feeling that comes with it.
I play guitar. There's no EV attached to it (in fact, people might pay me to stop ;) but there's still an emotional payoff.
The same goes for the lottery. For some people, there's entertainment value in it, despite understanding the mathematics of it. If you've ever played poker for money - unless you're exceptionally good, you paid money to sit around a table in a smoky room. EV is negative, emotional experience is a lot of fun. (Yeah, poker isn't entirely chance, but I promise that unless you're pretty good at it and spent a lot of time learning, it's pretty much equivalent)
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#118Really interesting concept! Are you planning on adding index fund investing in the future? It seems like you could incentivize investors to take a long term view with a similar, gamified approach.
We haven't thought about this yet but that's interesting. What kind of index fund gamification do you have in mind?
There was a company, forcerank, that was fantasy stock market. Rank stocks based on expected performance, and winner gets points, with cash prizes. They ran into a little SEC trouble, so careful with gamificating investing. https://www.sec.gov/news/pressrelease/2016-216.html
That said, it was a fun idea. Instead of picking lottery numbers, ranking tickers in the right order, and then pulling a date out of a hat? Something that only operates on past data?
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#119FNB, a bank in South Africa, used to do something similar. It was called the Million a Month account. If I recall the South African Supreme Court shut it down because it was considered a lottery
Yeah we actually studied the FNB program when we were setting out to develop Yotta. Basically, it got shut down because it got so popular in its ~2 years of operation and was taking away from the National Lottery.
The difference in the U.S is that there has been legislation explicitly supporting prize-linked savings, which didn't exist in South Africa. It was more of a grey area there.
A great academic read on the FNB MaMa program here: http://beniverson.org/papers/MaMa.pdf
Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save
#120I want to believe in it, but the skeptic in me wants to ask how this isn't a vehicle for the rich to get richer: If every $25 gets you a ticket, then someone with a $50 account has far worse odds than someone with a $5000 account. Of course, the $50 person has nothing to lose, but there's also a sense of dejection. Perhaps a cap on the total number of tickets an account can have?
I see what you mean. This is a reality in a regular savings account too, though. Accounts with higher balances earn more interest. With us, you earn more tickets. Hopefully the incentive to get more tickets helps people start building savings and they save more than they otherwise would have with a vanilla savings account.
Someone else having more tickets than you doesn't really affect you other than the potentially splitting the bigger prizes, but having more depositors also helps us offer bigger prizes in the first place, so it's somewhat circular.