AN EXPLANATION OF OPTIMAL EACH-WAY BETS BASED ON NON-EXPECTED UTILITY THEORY

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Published: Jan 2, 2013
DOI: https://doi.org/10.5750/jgbe.v3i2.584
Keywords:
Markowitz Utility Function Cumulative Prospect Theory Expo-Value Utility Function Probability Distortion Gambling.

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David Peel
Lancaster University
David Law

Abstract

The purpose in this paper is  to demonstrate how the non-expected utility models of Markowitz and Kahneman and Tversky  can explain why an agent, chooses to bet  each way on a horse.We also show that that appeal to moments of return, such as a preference for skewness of return, ceteris paribus, to explain the choice of the each way gamble over the single win gamble is , in general, invalid.

Article Details

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Vol. 3 No. 2 (2009)
Section
Articles

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