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  • An Explanation of Each-Way Wagers in Three Models Of Risky Choice

    Rights statement: This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 06/11/2017, available online: http://www.tandfonline.com/10.1080/00036846.2017.1397855

    Accepted author manuscript, 251 KB, PDF document

    Available under license: CC BY-NC: Creative Commons Attribution-NonCommercial 4.0 International License

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An Explanation of Each-Way Wagers in Three Models Of Risky Choice

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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An Explanation of Each-Way Wagers in Three Models Of Risky Choice. / Peel, David Alan.
In: Applied Economics, Vol. 50, No. 22, 02.2018, p. 2431-2438.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Peel, DA 2018, 'An Explanation of Each-Way Wagers in Three Models Of Risky Choice', Applied Economics, vol. 50, no. 22, pp. 2431-2438. https://doi.org/10.1080/00036846.2017.1397855

APA

Peel, D. A. (2018). An Explanation of Each-Way Wagers in Three Models Of Risky Choice. Applied Economics, 50(22), 2431-2438. https://doi.org/10.1080/00036846.2017.1397855

Vancouver

Peel DA. An Explanation of Each-Way Wagers in Three Models Of Risky Choice. Applied Economics. 2018 Feb;50(22):2431-2438. Epub 2017 Nov 6. doi: 10.1080/00036846.2017.1397855

Author

Peel, David Alan. / An Explanation of Each-Way Wagers in Three Models Of Risky Choice. In: Applied Economics. 2018 ; Vol. 50, No. 22. pp. 2431-2438.

Bibtex

@article{1f7a93b78045493ca744f53a4a16db37,
title = "An Explanation of Each-Way Wagers in Three Models Of Risky Choice",
abstract = "Punters may engage in betting on both a selection in an event to finish first or in one of the number of places, e.g. second, third or fourth. When the amounts staked with bookmakers at fixed odds on the win and place are equal, it is called an each-way bet. Each-way bets are apparently popular with punters but inconsistent with prominent models of wagering which assume gamblers are everywhere risk-seeking. In this note, we derive the conditions for win and place bets to be optimal in these three models of risky choice. The mathematical conditions for the each-way wager to be optimal, as opposed to a win and place wager with different stakes, are complicated and appear likely to occur rarely in practice. However, bettors obviously see the attraction in giving themselves two ways to bet on the one horse or two ways to win and betting each way. We suggest part of the {\textquoteleft}each-way{\textquoteright} betting attraction is that they are quick and easy to compute – a heuristic – to solve an otherwise complex betting strategy.",
keywords = "Each-way bets, cumulative prospect theory, rank-dependent utility",
author = "Peel, {David Alan}",
note = "This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 06/11/2017, available online: http://www.tandfonline.com/10.1080/00036846.2017.1397855",
year = "2018",
month = feb,
doi = "10.1080/00036846.2017.1397855",
language = "English",
volume = "50",
pages = "2431--2438",
journal = "Applied Economics",
issn = "0003-6846",
publisher = "Routledge",
number = "22",

}

RIS

TY - JOUR

T1 - An Explanation of Each-Way Wagers in Three Models Of Risky Choice

AU - Peel, David Alan

N1 - This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 06/11/2017, available online: http://www.tandfonline.com/10.1080/00036846.2017.1397855

PY - 2018/2

Y1 - 2018/2

N2 - Punters may engage in betting on both a selection in an event to finish first or in one of the number of places, e.g. second, third or fourth. When the amounts staked with bookmakers at fixed odds on the win and place are equal, it is called an each-way bet. Each-way bets are apparently popular with punters but inconsistent with prominent models of wagering which assume gamblers are everywhere risk-seeking. In this note, we derive the conditions for win and place bets to be optimal in these three models of risky choice. The mathematical conditions for the each-way wager to be optimal, as opposed to a win and place wager with different stakes, are complicated and appear likely to occur rarely in practice. However, bettors obviously see the attraction in giving themselves two ways to bet on the one horse or two ways to win and betting each way. We suggest part of the ‘each-way’ betting attraction is that they are quick and easy to compute – a heuristic – to solve an otherwise complex betting strategy.

AB - Punters may engage in betting on both a selection in an event to finish first or in one of the number of places, e.g. second, third or fourth. When the amounts staked with bookmakers at fixed odds on the win and place are equal, it is called an each-way bet. Each-way bets are apparently popular with punters but inconsistent with prominent models of wagering which assume gamblers are everywhere risk-seeking. In this note, we derive the conditions for win and place bets to be optimal in these three models of risky choice. The mathematical conditions for the each-way wager to be optimal, as opposed to a win and place wager with different stakes, are complicated and appear likely to occur rarely in practice. However, bettors obviously see the attraction in giving themselves two ways to bet on the one horse or two ways to win and betting each way. We suggest part of the ‘each-way’ betting attraction is that they are quick and easy to compute – a heuristic – to solve an otherwise complex betting strategy.

KW - Each-way bets

KW - cumulative prospect theory

KW - rank-dependent utility

U2 - 10.1080/00036846.2017.1397855

DO - 10.1080/00036846.2017.1397855

M3 - Journal article

VL - 50

SP - 2431

EP - 2438

JO - Applied Economics

JF - Applied Economics

SN - 0003-6846

IS - 22

ER -