Abstract
In Pelota matches, bets are made between viewers through a middleman who receives 16% of the finally paid amount. In this paper, a description of the way bets are made and an explanation of the existence of those markets are presented. Taking betting markets as a simplified analogy for financial markets we have searched for the explanation in a world where both sides of the market are not different in believes and preferences. We find that for a bet to exist when bettors are rank dependent expected utility maximizers, they have to be optimistic. Taking observations from actually made bets a preliminary analysis about the biases of those markets is presented.
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Llorente, L., Aizpurua, J. A Betting Market: Description and a Theoretical Explanation of Bets in Pelota Matches. Theor Decis 64, 421–446 (2008). https://doi.org/10.1007/s11238-007-9060-4
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DOI: https://doi.org/10.1007/s11238-007-9060-4