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Llorente Erviti, Loreto

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https://academica-e.unavarra.es/handle/2454/49415

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Llorente Erviti

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Loreto

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Economía

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1983

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Start date: 2006 × End date: 2006 ×

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Now showing 1 - 3 of 3
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    PublicationOpen Access
    A profitable strategy in the pelota betting market
    (2006) Llorente Erviti, Loreto; Economía; Ekonomia
    In pelota matches, games with two mutually exclusive and exhaustive outcomes, bets on the winner are made between viewers through a middleman who receives 16% of the finally paid amount. In this paper after the description of the way bets are made in the market we analyze what we call the general odds rule. Analyzing the way odds are fixed in the market we find that assuming equal return on bets there are biases in the market. Moreover, we find profitable betting strategies even taking commissions into account.
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    PublicationOpen Access
    A betting market: Description and a theoretical explanation of bets in pelota matches
    (2006) Llorente Erviti, Loreto; Aizpurua Agirre, José María; Economía; Ekonomia
    In pelota matches, bets are made between viewers through a middleman who receives 16% of the finally paid amount. In this paper a description of the way bets are made and an explanation of the existence of those markets is presented. Taking betting markets as a simplified analogy for financial markets we have searched for the explanation in a world where both sides of the market are not different in believes and preferences. Taking observations from actually made bets a preliminary analysis about the biases of those markets is presented.
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    PublicationOpen Access
    Rank dependent expected utility in the pelota betting system: an experiment
    (2006) Llorente Erviti, Loreto; Economía; Ekonomia
    We theoretically and experimentally study a zero sum betting market: the pelota betting system, but with commonly known objective probabilities and without commissions. We know that risk-averse expected utility maximizers with identical objective probabilities cannot agree on a bet. Nevertheless, the rank dependent expected utility model allows us to explain the existence of such betting markets even assuming individuals are all identical even in utilities. We focus on behaviour in a given period in a pelota betting market and we aim to explain the volume of bets assuming that all individuals are equal and their marginal utility on wealth is decreasing. We do this in two stages. First, subjects are asked to take betting decisions and the power utility function and probability weighting function are estimated. Once the underlying utility and probability weighting function are known, in a second stage subjects interact in a betting market and we test whether the volume of bets differs from proposed theoretical predictions.