Probability and Utility Estimates for Racetrack Bettors

Mukhtar M. Ali
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Mukhtar M. Ali: University of Kentucky, USA

Chapter 11 in Efficiency of Racetrack Betting Markets, 2008, pp 71-83 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractSubjective and estimated objective winning probabilities are obtained from 20,247 harness horse races. It is shown that subjectively a horse with a low winning probability is exaggerated and one with a high probability of winning is depressed. Various hypotheses characterizing the bettors' behavior to explain the observed subjective-objective probability relation are explored. Under some simplified assumptions, a utility of wealth function of a decision maker is derived, and a quantitative summary measure of his risk attitude is defined. Attitude toward risk of a representative bettor is examined. It is found that he is a risk lover and tends to take more risk as his capital dwindles.

Keywords: Racetrack Efficiency; Racetrack Betting Market; Racetrack Betting; Win Market; Finance (search for similar items in EconPapers)
Date: 2008
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