IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Information and Attitudes to Risk at the Track

  • Adi Schnytzer

    ()

    (Bar-Ilan University)

  • Sara Westreich

    (Bar-Ilan University)

Registered author(s):

    Abstract There have been many attempts, theoretical and empirical, to explain the persistence of a favorite-longshot bias in various horse betting markets. Most recently, Snowberg and Wolfers (2010) have shown that the data for the US markets support a misperceptions of probability approach in line with prospect theory over a neoclassical approach of the Quandt (1986) type. However, their paper suffers from two basic difficulties which beset much of this literature. First, the theoretical model used fails to allow for the existence of horse betting markets which either display no such bias (or a reverse bias) as in Hong Kong and at least one large Australian market (Busche and Hall, 1988, Schnytzer, Shilony and Thorne, 2003 and Luppi and Schnytzer, 2008). Second, econometric testing and theoretical modeling are facilitated by the highly unrealistic assumption that the betting population is homogeneous with respect to either information or attitude to risk or (usually) both. Our purpose is to show that allowing for heterogeneous betting populations (in terms of both attitude to risk and access to information) permits the explanation for the different biases (or their absence) observed in different markets within a strictly neoclassical framework of rational bettors. We conclude with empirical support for our model.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.biu.ac.il/soc/ec/wp/2011-16.pdf
    File Function: Working paper
    Download Restriction: no

    Paper provided by Bar-Ilan University, Department of Economics in its series Working Papers with number 2011-16.

    as
    in new window

    Length:
    Date of creation: Mar 2011
    Date of revision:
    Handle: RePEc:biu:wpaper:2011-16
    Contact details of provider: Postal: Faculty of Social Sciences, Bar Ilan University 52900 Ramat-Gan
    Phone: Phone: +972-3-5318345
    Fax: +972-3-7384034
    Web page: http://www.biu.ac.il/soc/ec
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Ronen Bar-El & Teresa García-Muñoz & Shoshana Neuman & Yossef Tobol, 2013. "The evolution of secularization: cultural transmission, religion and fertility—theory, simulations and evidence," Journal of Population Economics, Springer, vol. 26(3), pages 1129-1174, July.
    2. Leonid V. Azarnert, 2008. "Involuntary Integration in Public Education, Fertility and Human Capital," Working Papers 2008-07, Bar-Ilan University, Department of Economics.
    3. Andrew T. Young & Matthew J. Higgins & Daniel Levy, 2003. "Sigma Convergence Versus Beta Convergence: Evidence from U.S. County-Level Data," Working Papers 2003-06, Bar-Ilan University, Department of Economics.
    4. Avichai Snir & Daniel Levy, 2011. "Shrinking Goods and Sticky Prices: Theory and Evidence," Emory Economics 1104, Department of Economics, Emory University (Atlanta).
    5. Sourav Ray & Haipeng (Allan) Chen & Mark Bergen & Daniel Levy, 2005. "Asymmetric Wholesale Pricing: Theory and Evidence," Working Papers 2005-02, Bar-Ilan University, Department of Economics.
    6. Daniel Levy & Haipeng (Allan) Chen & Georg Müller & Shantanu Dutta & Mark Bergen, 2010. "Holiday Price Rigidity and Cost of Price Adjustment," Economica, London School of Economics and Political Science, vol. 77(305), pages 172-198, 01.
    7. Kanbur, Ravi & Rapoport, Hillel, 2003. "Migration Selectivity And The Evolution Of Spatial Inequality," Working Papers 127769, Cornell University, Department of Applied Economics and Management.
    8. Matthew Higgins & Daniel Levy & Andrew Young, 2005. "Growth and Convergence across the US: Evidence from County-Level Data," Macroeconomics 0505009, EconWPA.
    9. Daniel Levy & Haipeng Allan Chen & Sourav Ray & Mark Bergen, 2004. "Asymmetric Price Adjustment "in the Small:" An Implication of Rational Inattention," Macroeconomics 0407012, EconWPA, revised 11 May 2005.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:biu:wpaper:2011-16. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.