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Decision‐making in betting markets
Author(s) -
Vaughan Williams Leighton
Publication year - 2004
Publication title -
significance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.123
H-Index - 21
eISSN - 1740-9713
pISSN - 1740-9705
DOI - 10.1111/j.1740-9713.2004.00041.x
Subject(s) - odds , financial market , simple (philosophy) , point (geometry) , economics , value (mathematics) , mathematical economics , decision making , financial economics , mathematics , operations management , philosophy , statistics , finance , epistemology , logistic regression , geometry , purchasing
The placing of a bet is a classic example of decision‐making under uncertainty. A betting market is also an example of a simple financial market, but one which possesses the advantage that each bet is characterised by a well‐defined end point at which it possesses a definite value, i.e. the amount won or lost. Leighton Vaughan Williams explains the implications for our understanding of economic decision‐making of the observed tendency for the expected returns on bets to differ markedly at different odds levels.