Probability and Utility Estimates for Racetrack Bettors

Bibliographic Data

ID10176136
AuthorsMukhtar M Ali (corresponding author)
Year1977
Volume85
Issue4
Pages803-815
Publication date1977-08-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueJournal of Political Economy (JOURNAL)
Journal identifiersISSN: 0022-3808 • E-ISSN: 1537-534X
PublisherUniversity of Chicago Press (PUBLISHER • US)
DOI10.1086/260600
OpenAlexW2011253855
LanguageEN
Citations received41
References cited1

Subjective 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

Actuarial science · Decision maker · Econometrics · Economics · Expected utility hypothesis · Function (biology · Mathematical economics · Operations research · Statistics · Subjective expected utility · Decision-Making and Behavioral Economics · Economics of Agriculture and Food Markets · Mathematics · Sports Analytics and Performance