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dc.contributor.authorSnowberg, Eriken_US
dc.contributor.authorWolfers, Justinen_US
dc.date.accessioned2010-05-03en_US
dc.date.accessioned2010-07-23T09:35:36Z-
dc.date.available2010-07-23T09:35:36Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/36914-
dc.description.abstractThe favorite-longshot bias describes the longstanding empirical regularity that betting odds provide biased estimates of the probability of a horse winning - longshots are overbet, while favorites are underbet. Neoclassical explanations of this phenomenon focus on rational gamblers who overbet longshots due to risk-love. The competing behavioral explanations emphasize the role of misperceptions of probabilities. We provide novel empirical tests that can discriminate between these competing theories by assessing whether the models that explain gamblers' choices in one part of their choice set (betting to win) can also rationalize decisions over a wider choice set, including compound bets in the exacta, quinella or trifecta pools. Using a new, large-scale dataset ideally suited to implement these tests we find evidence in favor of the view that misperceptions of probability drive the favorite-longshot bias, as suggested by Prospect Theory.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesDiscussion paper series // Forschungsinstitut zur Zukunft der Arbeit 4884en_US
dc.subject.jelD03en_US
dc.subject.jelD49en_US
dc.subject.jelG12en_US
dc.subject.jelL83en_US
dc.subject.ddc330en_US
dc.subject.keywordPricing under risken_US
dc.subject.keywordprobability weightingen_US
dc.subject.keywordcompound lotteriesen_US
dc.subject.keywordfavorite-longshot biasen_US
dc.subject.stwGlücksspielen_US
dc.subject.stwEntscheidung bei Unsicherheiten_US
dc.subject.stwBiasen_US
dc.subject.stwProspect Theoryen_US
dc.subject.stwWahrnehmungen_US
dc.subject.stwRisikopräferenzen_US
dc.subject.stwTesten_US
dc.titleExplaining the favorite-longshot bias: Is it risk-love or misperceptions?en_US
dc.typeWorking Paperen_US
dc.identifier.ppn625137000en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
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