EXPECTED VALUES AND VARIANCES IN BOOKMAKER PAYOUTS: A THEORETICAL APPROACH TOWARDS SETTING LIMITS ON ODDS

@article{Cortis2015EXPECTEDVA,
  title={EXPECTED VALUES AND VARIANCES IN BOOKMAKER PAYOUTS: A THEORETICAL APPROACH TOWARDS SETTING LIMITS ON ODDS},
  author={Dominic Cortis},
  journal={The Journal of Prediction Markets},
  year={2015},
  volume={9},
  pages={1-14}
}
  • Dominic Cortis
  • Published 2015
  • Economics
  • The Journal of Prediction Markets
This paper is available as Open-Access thanks to a donation from Pinnacle Sports This study summarizes the key methods of displaying probabilities as odds and provides simple mathematical derivation of a number of key statements in setting odds. Firstly it estimates the expected bookmaker profit as a function of wagers placed and bookmaker margin. Moreover it shows that odds set by bookmakers should have implied probabilities that add up to at least one, otherwise arbitrage is present… Expand

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