Information and Attitudes to Risk at the Track

Adi Schnytzer () and Sara Westreich
Additional contact information
Adi Schnytzer: Bar-Ilan University
Sara Westreich: Bar-Ilan University

No 2011-16, Working Papers from Bar-Ilan University, Department of Economics

Abstract: Abstract There have been many attempts, theoretical and empirical, to explain the persistence of a favorite-longshot bias in various horse betting markets. Most recently, Snowberg and Wolfers (2010) have shown that the data for the US markets support a misperceptions of probability approach in line with prospect theory over a neoclassical approach of the Quandt (1986) type. However, their paper suffers from two basic difficulties which beset much of this literature. First, the theoretical model used fails to allow for the existence of horse betting markets which either display no such bias (or a reverse bias) as in Hong Kong and at least one large Australian market (Busche and Hall, 1988, Schnytzer, Shilony and Thorne, 2003 and Luppi and Schnytzer, 2008). Second, econometric testing and theoretical modeling are facilitated by the highly unrealistic assumption that the betting population is homogeneous with respect to either information or attitude to risk or (usually) both. Our purpose is to show that allowing for heterogeneous betting populations (in terms of both attitude to risk and access to information) permits the explanation for the different biases (or their absence) observed in different markets within a strictly neoclassical framework of rational bettors. We conclude with empirical support for our model.

Date: 2011-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www2.biu.ac.il/soc/ec/wp/2011-16.pdf Working paper (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www2.biu.ac.il:443 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:biu:wpaper:2011-16

Access Statistics for this paper

More papers in Working Papers from Bar-Ilan University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Department of Economics ().