Hedging one’s happiness – Should a sports fan bet on the opponent?
AbstractThis paper sets out to show that a risk-averse sport fanatic could hedge his happiness by betting on the opposition. The literature surrounding happiness, risk- and loss aversion is explored and a model is developed to explain the happiness a fan derives from a match. It is shown that expectation as to what the result may be plays a vital role in the emotions awakened. An upset victory is much sweeter than one where one’s team is the outright favourite. Expectations determine the odds offered by bookies. Here lies the beauty of this strategy. Suffering an unexpected loss is more painful than an anticipated beating. That being said, the payout from betting on the underdog opposition (which subsequently won) would be larger the more unexpected the result was. To bet on the opposition to hedge one’s happiness appears to be a plausible strategy for an economically risk-averse sports fan – especially if one supports the odds-on favourite.
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Bibliographic InfoPaper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 20/2011.
Date of creation: 2011
Date of revision:
Happiness; Sports betting; Risk aversion; Loss aversion;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-HAP-2011-12-13 (Economics of Happiness)
- NEP-HPE-2011-12-13 (History & Philosophy of Economics)
- NEP-SPO-2011-12-13 (Sports & Economics)
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