Bettors Love Skewness, Not Risk, at the Horse Track

Golec, Joseph H.; Tamarkin, Maurry

doi:10.1086/250007

Cited by 356 publications

(154 citation statements)

References 16 publications

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“…As can be seen, complex gambles offer high potential wins, and are potentially alluring to gamblers who are attracted by the maximum potential win (Golec & Tamarkin, 1998). …”

Section: Resultsmentioning

confidence: 99%

Behavioral complexity of British gambling advertising

Newall

2017

Addiction Research & Theory

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Background: The scale and complexity of British gambling advertising has increased in recent years. "Live-odds" TV gambling adverts broadcast the odds on very specific, complex, gambles during sporting events (e.g., in soccer, "Wayne Rooney to score the first goal, 5-to-1," or, "Chelsea to win 2-1, 10-to-1"). These gambles were analyzed from a behavioral scientific perspective (the intersection of economics and psychology). Method: A mixed methods design combining observational and experimental data. A content analysis showed that live-odds adverts from two months of televised English Premier League matches were biased towards complex, rather than simple, gambles. Complex gambles were also associated with high bookmaker profit margins. A series of experiments then quantified the rationality of participants' forecasts across key gambles from the content analysis (Total N = 1,467 participants across 5 Experiments). Results: Soccer fans rarely formed rational probability judgments for the complex events dominating gambling advertising, but were much better at estimating simple events. Conclusions: British gambling advertising is concentrated on the complex products that mislead consumers the most.Behavioral scientific findings are relevant to the active public debate about gambling.

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“…As can be seen, complex gambles offer high potential wins, and are potentially alluring to gamblers who are attracted by the maximum potential win (Golec & Tamarkin, 1998). …”

Section: Resultsmentioning

confidence: 99%

Behavioral complexity of British gambling advertising

Newall

2017

Addiction Research & Theory

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“…Ali (1977) assumes an initial wealth w = 1 and estimates b = 1.178, or an absolute risk aversion (comparable to our α) of -0.178. Kanto, et al (1992) and Golec and Tamarkin (1998) arrive at similar estimates.…”

Section: Standard Auctionsmentioning

confidence: 52%

“…More recent work by Golec and Tamarkin (1998) and Garrett and Sobel (1999) proposes that what appears as risk-loving in the Friedman-Savage utility should be more aptly named skewness-loving. In an empirical study of horse-track betting and US lottery games, respec-tively, both papers conclude that gamblers experience disutility from variance in payoffs (i.e.…”

Section: Risk-loving Preferencesmentioning

confidence: 99%

Pay-to-Bid Auctions

Platt

Price

Tappen³

2010

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We analyze a new auction format in which bidders pay a fee each time they increase the auction price. Bidding fees are the primary source of revenue for the seller, but produce the same expected revenue as standard auctions. Our model predicts a particular distribution of ending prices, which we test against observed auction data. Our model fits the data well for over three-fourths of routinely auctioned items. The notable exceptions are video game paraphernalia, which show more aggressive bidding and higher expected revenue. By incorporating mild risk-loving preferences in the model, we explain nearly all of the auctions. We analyze a new auction format in which bidders pay a fee each time they increase the auction price. Bidding fees are the primary source of revenue for the seller, but produce the same expected revenue as standard auctions. Our model predicts a particular distribution of ending prices, which we test against observed auction data.Our model fits the data well for over three-fourths of routinely auctioned items. The notable exceptions are video game paraphernalia, which show more aggressive bidding and higher expected revenue. By incorporating mild risk-loving preferences in the model, we explain nearly all of the auctions.

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“…If individuals exhibit preference for right-skewed lotteries, even risk-averse individuals might prefer to enter lotteries (see Golec & Tamarkin 1998, Chiu 2010). …”

Section: Fleurbaey (2008) First Recalls the Solution Of Le Grand (199mentioning

confidence: 99%

Equality of opportunity, moral hazard and the timing of luck

Lefranc

Trannoy

2017

Soc Choice Welf

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Equality of Opportunity, Moral Hazard and the Timing of Luck mArch 2017Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Equality of Opportunity, Moral Hazard and the Timing of LuckEquality of opportunity is usually defined as a situation where the effect of circumstances on outcome is nullified (compensation principle) and effort is rewarded (reward principle).We propose a new version of the reward principle based on the idea that effort deserves reward for it is costly. We show that luck can be introduced in two ways in the definition of these principles, depending on whether the correlation between luck and circumstances should be nullified and whether the correlation between luck and effort should be rewarded. In this regard, the timing of luck with respect to effort decisions is crucial, as is exemplified by moral hazard where effort choice influences the lottery of future uncertain events. JEL Classification:D63,J62,C14

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Bettors Love Skewness, Not Risk, at the Horse Track

Cited by 356 publications

References 16 publications

Behavioral complexity of British gambling advertising

Behavioral complexity of British gambling advertising

Pay-to-Bid Auctions

Equality of opportunity, moral hazard and the timing of luck

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