Theory and Decision

, Volume 64, Issue 2–3, pp 421–446 | Cite as

A Betting Market: Description and a Theoretical Explanation of Bets in Pelota Matches

Article

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.

Keywords

betting Pelota betting system probability weighing function rank dependent expected utility sport betting 

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Copyright information

© Springer Science+Business Media LLC 2007

Authors and Affiliations

  1. 1.Universidad Pública de NavarraPamplonaSpain

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