An explanation of each-way wagers in three models of risky choice

David Peel

Applied Economics, 2018, vol. 50, issue 22, 2431-2438

Abstract: Punters may engage in betting on both a selection in an event to finish first or in one of the number of places, e.g. second, third or fourth. When the amounts staked with bookmakers at fixed odds on the win and place are equal, it is called an each-way bet. Each-way bets are apparently popular with punters but inconsistent with prominent models of wagering which assume gamblers are everywhere risk-seeking. In this note, we derive the conditions for win and place bets to be optimal in these three models of risky choice. The mathematical conditions for the each-way wager to be optimal, as opposed to a win and place wager with different stakes, are complicated and appear likely to occur rarely in practice. However, bettors obviously see the attraction in giving themselves two ways to bet on the one horse or two ways to win and betting each way. We suggest part of the ‘each-way’ betting attraction is that they are quick and easy to compute – a heuristic – to solve an otherwise complex betting strategy.

Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2017.1397855 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:50:y:2018:i:22:p:2431-2438

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2017.1397855

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().