On the Implications of the Markowitz Model of Utility embodying Gain Seeking Preferences for Odds on Betting and Bookmakers choice of Spread or Odds Betting

David Peel

Economics Bulletin, 2013, vol. 33, issue 2, 1420-1428

Abstract: We demonstrate in a parametric formulation of the Markowitz model of utility that unless agents are initially gain seeking they will not bet on heavily odds on favorites for a given negative expected rate of return. The model supports Sauer's (1998) observation that it may not be profitable to make a market in contests involving heavy odds on favorites with implications for bookmakers choice of spread or odds markets in sports betting.

Keywords: Markowitz model of utility; Gain seeking preferences; limits to odds on betting; bookmaker choice of spreads versus odds markets; lopsided contests (search for similar items in EconPapers)
JEL-codes: D0 D8 (search for similar items in EconPapers)
Date: 2013-06-10
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