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Agents' Models and Participation in a Gambling Market

Author

Listed:
  • Krautmann, Anthony C.

    (De Paul University)

Abstract

This paper explains the economics of gambling behavior within a framework which explicitly incorporates agents' models and attitude toward risk. Within this framework, we characterize the formation of subjective probabilities, the equilibrium in a pointspread gambling market, and how the diversity in beliefs opens up the market to more risk-averse individuals. In addition, we derive the individual's reservation pointspread as a function of his degree of risk aversion.

Suggested Citation

  • Krautmann, Anthony C., 1995. "Agents' Models and Participation in a Gambling Market," Eastern Economic Journal, Eastern Economic Association, vol. 21(2), pages 239-246, Spring.
    • Handle: RePEc:eej:eeconj:v:21:y:1995:i:2:p:239-246
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume21/V21N2P239_246.pdf
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    More about this item

    Keywords

    Belief; Equilibrium; Gambling; Probabilities; Risk Averse; Risk Aversion; Risk;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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