Marginal risk aversion and preferences in a betting market Article

Hamid, SS, Prakash, AJ, Smyser, MW. (1996). Marginal risk aversion and preferences in a betting market . APPLIED ECONOMICS, 28(3), 371-376. 10.1080/000368496328740

cited authors

  • Hamid, SS; Prakash, AJ; Smyser, MW

authors

abstract

  • An individual's behavioural attitudes toward variance and non-symmetry in the payoff distributions of pari-mutuel gambles are empirically examined using the von Neumann-Morgenstern expected utility of wealth paradigm. Preferences over payoff distributions for a representative bettor are estimated from observed payoffs at a greyhound racetrack. The results indicate that the representative bettor exhibits increasing absolute risk aversion and, given that the representative bettor is locally non-satiated with regard to wealth, exhibits preference for variance and aversion to positive skewness in the payoff distributions of the gambles examined.

publication date

  • January 1, 1996

published in

Digital Object Identifier (DOI)

start page

  • 371

end page

  • 376

volume

  • 28

issue

  • 3