Skip to main content
Article thumbnail
Location of Repository

Assessing bettors' ability to process dynamic information: Policy implications

By J.E.V. Johnson, R. O'Brien and M. Sung

Abstract

Regulation is often employed to encourage the provision of readily interpretable, explicit<br/>information to betting markets in an effort to promote their efficiency. This approach is<br/>supported by a considerable volume of laboratory-based research which suggests that individuals<br/>make poor judgments in the face of implicit, dynamic information. This article investigates to<br/>what extent horserace bettors, who have strong incentives to make good probability judgments,<br/>require the regulator’s protection from such hostile information environments. In particular, we<br/>examine the accuracy of the subjective probabilities of bettors concerning 16,344 horses in 1671<br/>races. We find that bettors are skilled in adopting effective heuristics to simplify their dynamic<br/>information environment and, even in the face of restricted information, develop well-calibrated<br/>judgments using outcome feedback. A number of factors that help bettors to achieve good<br/>calibration are identified and the implications for market regulation are discussed

Topics: HD61
Year: 2010
OAI identifier: oai:eprints.soton.ac.uk:64383
Provided by: e-Prints Soton

Suggested articles

Citations

  1. (1986). A day at the races: A study of IQ, expertise and cognitive complexity.
  2. (1987). Assessing human judgment: Has it been done, can it be done, should it be done?
  3. (1993). Context-sensitive heuristics in statistical reasoning.
  4. (1994). Discrete subjective probabilities and decision analysis: Elicitation, calibration and combination. In Subjective probability,
  5. (1994). Effects of cognitive feedback components, display format, and elaboration on performance. Organization Behavior and Human Decision Processes 58:369–85.
  6. (1992). Effects of justification and a mechanical aid on judgment performance. Organizational Behavior and Human Decision Processes 52:292–306.
  7. (1987). Efficient market adjustment of odds prices to reflect track biases.
  8. (2002). Eliminating recency with self review: The case of auditors’ ‘going concern’ judgments.
  9. (1980). Heuristics and the weighting of base rate information in diagnostic tasks by nurses. Unpublished doctoral dissertation.
  10. (1994). Judgment in managerial decision-making.
  11. (1995). On the calibration of knowledge and perception.
  12. (1994). Post-position bias: An econometric analysis of the 1987 season at Exhibition Park. In Efficiency of Racetrack Betting Markets,
  13. (1984). Real and laboratory gambling, sensation-seeking, and arousal.
  14. (1987). Sales forecasting practices, results from a United States survey.
  15. (1994). Subjective probability: What should we believe? In Subjective probability,
  16. (1994). The calibration and resolution of confidence in perceptual judgments. Perception and Psychophysics 55:412–28.
  17. (2003). The input bias: The misuse of input information in judgments of outcomes. Organizational Behavior and Human Decision Processes 91:243–53.
  18. (1993). The naturalistic bases of decision biases. In Decision making in action: Models and methods, edited by
  19. (1983). The winning horseplayer.
  20. (1990). Value betting.
  21. (2004). What is learned from experience in a probabilistic environment?

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.