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David Alan Peel
''On the Implications of the Markowitz Model of Utility embodying Gain Seeking Preferences for Odds on Betting and Bookmakers choice of Spread or Odds Betting''
( 2013, Vol. 33 No.2 )
We demonstrate in a parametric formulation of the Markowitz model of utility that unless agents are initially gain seeking they will not bet on heavily odds on favorites for a given negative expected rate of return. The model supports Sauer's (1998) observation that it may not be profitable to make a market in contests involving heavy odds on favorites with implications for bookmakers choice of spread or odds markets in sports betting.
Keywords: Markowitz model of utility, Gain seeking preferences, limits to odds on betting, bookmaker choice of spreads versus odds markets, lopsided contests
JEL: D8 - Information, Knowledge, and Uncertainty: General
Manuscript Received : Apr 19 2013 Manuscript Accepted : Jun 10 2013

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