Probability and Utility Estimates for Racetrack Bettors

On the state of the art: risk communication to the public

“…See for example work by Ali (1977), Griffith (1949), Lichtenstein et al (1978), Lopez Gomez (1990), Nogee and Lieberman (1960), Preston and Baratta (1948), and Sprowls (1953). Kaplan et al (1986) found that graphical representations of extremely small side effect probabilities increased the probability that experimental subjects would state that they were willing to take a vaccine.…”

Drinkers and bettors: Investigating the complementarity of alcohol consumption and problem gambling

“…Assuming that 1) the act of gambling may produce a negative outcome (i.e., the gambler may lose the wager) and that 2) the marginal utility of income is diminishing, both fair and unfair gambles seem to be economic "blunders" (Kwang, 1965). Economists have proposed a number of possible explanations for gambling, including non-concave utility curves (Friedman and Savage, 1948;Hartley and Farrell, 2002), differences of opinion (Morris, 1994;Shin, 1993), varying risk preferences (Ali, 1977;Quandt, 1986), augmented income theory (Kim, 1973), "dream" demand functions (Johnson et al, 1999), money values and probabilities in any risky situation generating direct value beyond that represented by an expected utility function (Conlisk, 1993), and expenditure indivisibility (Kwang, 1965). Economists have also examined the economic impact (e.g., employment, mortality rates, quality of life, crime rates) of casino gambling (Evans and Topolski, 2002;Grinols and Mustard, 2006;Kearney, 2005a;Nichols et al, 2002), consumer behavior and economic growth in the presence of lotteries (Kearney, 2005b;Walker and Jackson, 1999), casino revenue taxation (Anderson, 2005), and determinants of lottery and casino demand (Clotfelter and Cook, 1990;Cook and Clotfelter, 1993;Garrett and Sobel, 1999).…”

Untitled

“…The differential markup may reflect a preference amongst bettors for either variance or skewness. For example, Ali (1977) and Quandt (1986) identify bettors as displaying local risk preference, as evidenced by the overbetting of longshots relative to favorites. However, Bird, McCrae and Beggs (1987), using Australian data, and Golec and Tamarkin (1998), using US data, argue that in fact bettors in the US are averse to risk but display a strong preference for skew.…”