Agents' Models and Participation in a Gambling Market

Anthony Krautmann

Eastern Economic Journal, 1995, vol. 21, issue 2, 239-246

Abstract: This paper explains the economics of gambling behavior within a framework which explicitly incorporates agents' models and attitude toward risk. Within this framework, we characterize the formation of subjective probabilities, the equilibrium in a pointspread gambling market, and how the diversity in beliefs opens up the market to more risk-averse individuals. In addition, we derive the individual's reservation pointspread as a function of his degree of risk aversion.

Keywords: Belief; Equilibrium; Gambling; Probabilities; Risk Averse; Risk Aversion; Risk (search for similar items in EconPapers)
JEL-codes: D81 L83 (search for similar items in EconPapers)
Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:21:y:1995:i:2:p:239-246

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