search query: @freeterm Favourite-longshot bias / total: 1
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| Author: | Cain, M. Peel, D. |
| Title: | The utility of gambling and the favourite-longshot bias |
| Journal: | European Journal of Finance
2004 : OCT, VOL. 10:5, p. 379-390 |
| Index terms: | Gambling Industry |
| Freeterms: | Favourite-longshot bias Gambling Reverse bias |
| Language: | eng |
| Abstract: | It is a common belief that the usual favourite-longshot bias in gambling is that gamblers are risk-lovers. Conditions are derived under which the bias occurs and it is shown to be consistent with a utility function that has elasticity greater than one in a certain range. With a utility function that displays risk-aversion as well as risk loving behaviour over its domain, it is ascertained that the expected return-win probability frontier is not monotonic as has been hitherto tacitly assumed. This gives a consistent explanation for both the usual favourite-longshot bias and also for the few examples where a reverse bias has been observed. |
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