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"The Lottery" is set in a small farming village, somewhere reasonably isolated from other villages. The people living there focus on their yearly harvest to see them through the winter, and ever since the village was founded take part in a ritualistic Lottery that picks one person to be sacrificed in honor of the harvest.
The village is not greatly described, except in brief snippets; it seems to be a typical rural farming village, with communal activities and every person directly associated in some way with village events.
...the flowers were blossoming profusely and the grass was richly green. The people of the village began to gather in the square, between the post office and the bank, around ten o'clock...
(Jackson, "The Lottery," classicshorts.com)
This innocuous place is like many other villages around it. The anonymity of the village adds to its menace, as it could be any place in the country, even right next door to the reader's hometown. By using a sort of "Everyplace USA" setting, the author demonstrates that innocent exteriors can sometimes hide terrible secrets.
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