Risk aversion and favourite–longshot bias in a competitive fixed-odds betting market
Karl Whelan · Economica
Main finding
Bettor disagreement combined with bookmaker risk aversion can generate a favourite–longshot pattern (worse returns on long shots) without assuming that bettors love risk.
Limitations
A stylised model; it explains how a bias can arise rather than measuring it in a specific market.
Study details
- Authors
- Karl Whelan
- Published
- 2024 (first online 2023)
- Venue
- Economica 91(361), 188–209
- Status
- Published
- Evidence type
- Peer-reviewed theory
- Evidence strength
- Moderate (our assessment of how much weight the finding can bear)
- Sport
- General fixed-odds sports betting
- Markets
- Competitive bookmaker markets
- Method
- Theoretical model of competitive, risk-averse bookmakers facing bettors who disagree about probabilities.
- Sample
- Not applicable (mainly theory).
- Replication
- Not applicable.
Read the original
doi:10.1111/ecca.12500 (opens in a new tab)
Our summary is an original paraphrase for education. Verification: Bibliographic record checked against publisher, index or author listings. Checked 2026-10-25.