Quotation Walther, Herbert. 2008. Monopoly and Competition in the Market for Pari-mutuel bets – A theoretical Approach. (2008), 2 2, 61-78. Journal of Gambling Business and Economics 2 (2): 61-78.


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Abstract

An intertemporal state dependent expected utility model (generating S-shaped probability weighting by incorporating anticipated flows of utility from elation and disappointment) is used as a framework for analyzing the demand for various gambles. The analysis is extended to compare pari-mutuel bets under competitive and monopolistic conditions. The following conclusions can be drawn: (1) A monopoly fosters the `skeweness' of the pari-mutual bet: In equilibrium, the wager and the demand for probability to win are lower, while the wager per unit of probability to win and the prize are higher. (3) If prize expectations are endogenous, rollovers might be a necessary device to prevent instability. (4) Rational gamblers will be indifferent between `wager tax' and `bank holder' type methods of raising monopoly profits.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Gambling Business and Economics
Language English
Title Monopoly and Competition in the Market for Pari-mutuel bets – A theoretical Approach. (2008), 2 2, 61-78
Volume 2
Number 2
Year 2008
Page from 61
Page to 78
Reviewed? Y
URL http://www.ingentaconnect.com/content/ubpl/jgbe/2008/00000002/00000002/art00004

Associations

People
Walther, Herbert (Details)
Organization
Department of Economics DP (Details)
Department of Economics (Kartal) (Details)
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