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Optimal Allocation of Resources in a Pari-Mutuel Setting

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  • Bernard Rosner

    (Channing Laboratory, Boston City Hospital, Harvard Medical School and Harvard University)

Abstract

This article deals with an optimal algorithm for wagering in a pari-mutuel situation given that one is a perfect handicapper. A general rule is given for all pari-mutuel events with mutually exclusive outcomes. The rule has several surprising aspects which differ considerably from previous betting rules. The rule is useful when one's own bet is small relative to the total amount bet by the public. The optimality criterion is that of maximizing the expected log return.

Suggested Citation

  • Bernard Rosner, 1975. "Optimal Allocation of Resources in a Pari-Mutuel Setting," Management Science, INFORMS, vol. 21(9), pages 997-1006, May.
    • Handle: RePEc:inm:ormnsc:v:21:y:1975:i:9:p:997-1006
    DOI: 10.1287/mnsc.21.9.997
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    Cited by:

    1. Bhamathi, G. & Prema, K., 1982. "Multiquark hadronic states in SU(4), SU(5) & SU(6) flavour groups," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 114(1), pages 211-215.
    2. Erhan Bayraktar & Alexander Munk, 2016. "High-Roller Impact: A Large Generalized Game Model of Parimutuel Wagering," Papers 1605.03653, arXiv.org, revised Mar 2017.
    3. Rosenbloom, E. S., 2003. "A better probability model for the racetrack using Beyer speed numbers," Omega, Elsevier, vol. 31(5), pages 339-348, October.

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