MARGINAL RISK-AVERSION AND PREFERENCES IN A BETTING MARKET

Citation
Ss. Hamid et al., MARGINAL RISK-AVERSION AND PREFERENCES IN A BETTING MARKET, Applied economics, 28(3), 1996, pp. 371-376
Citations number
17
Categorie Soggetti
Economics
Journal title
ISSN journal
00036846
Volume
28
Issue
3
Year of publication
1996
Pages
371 - 376
Database
ISI
SICI code
0003-6846(1996)28:3<371:MRAPIA>2.0.ZU;2-C
Abstract
An individual's behavioural attitudes toward variance and non-symmetry in the payoff distributions of pari-mutuel gambles are empirically ex amined using the von Neumann-Morgenstern expected utility of wealth pa radigm. Preferences over payoff distributions for a representative bet ter are estimated from observed payoffs at a greyhound racetrack. The results indicate that the representative better exhibits increasing ab solute risk aversion and, given that the representative better is loca lly non-satiated with regard to wealth, exhibits preference for varian ce and aversion to positive skewness in the payoff distributions of th e gambles examined.