Decision-making in betting markets
Article first published online: 7 OCT 2004
Volume 1, Issue 3, pages 109–112, September 2004
How to Cite
Vaughan Williams, L. (2004), Decision-making in betting markets. Significance, 1: 109–112. doi: 10.1111/j.1740-9713.2004.00041.x
- Issue published online: 7 OCT 2004
- Article first published online: 7 OCT 2004
The placing of a bet is a classic example of decision-making under uncertainty. A betting market is also an example of a simple financial market, but one which possesses the advantage that each bet is characterised by a well-defined end point at which it possesses a definite value, i.e. the amount won or lost. Leighton Vaughan Williams explains the implications for our understanding of economic decision-making of the observed tendency for the expected returns on bets to differ markedly at different odds levels.