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Computing the Probability of Winning a Competition with an Application to Horse Races

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  • Rodriguez Alvaro

    (Rutgers University, Newark)

Abstract

We use the theoretical framework of "tournament theory" to obtain a statistical foundation for the most popular contest function used in the economics literature. We show that once one solves the issue of measuring "output" as it appears in tournament theory, one can obtain maximum likelihood estimates of the parameters in the contest function based on the past performance of the competitors. The findings are used to predict the odds of winning a horse race and the results compared with the odds generated by the actual wagers.

Suggested Citation

  • Rodriguez Alvaro, 2011. "Computing the Probability of Winning a Competition with an Application to Horse Races," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 7(3), pages 1-11, July.
    • Handle: RePEc:bpj:jqsprt:v:7:y:2011:i:3:n:3
    DOI: 10.2202/1559-0410.1310
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    References listed on IDEAS

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    5. John Gandar & Richard Zuber & R. Stafford Johnson, 2001. "Searching for the favourite-longshot bias down under: an examination of the New Zealand pari-mutuel betting market," Applied Economics, Taylor & Francis Journals, vol. 33(13), pages 1621-1629.
    6. Ben-Naim Eli & Vazquez Federico & Redner Sidney, 2006. "Parity and Predictability of Competitions," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 2(4), pages 1-14, October.
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