Optimal Pricing in the Online Betting Market

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Optimal Pricing in the Online Betting Market
 
Montone, Maurizio
(2021) Journal of Economic Behavior and Organization, volume 186, issue June 2021, pp. 344 - 363
(Article)
Abstract
I find that the optimal price of a bet for a risk-averse bookmaker is a function of elasticity of demand and the number of outcomes of the betting event. In the presence of shocks to the order flow, however, the optimal price can change, and large adjustments can create arbitrage ... read more
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Keywords: Arbitrage, Betting market, Market efficiency, Risk aversion, Economics and Econometrics, Organizational Behavior and Human Resource Management
DOI: https://doi.org/10.1016/j.jebo.2021.04.007
ISSN: 0167-2681
Publisher: Elsevier
Note: Funding Information: I would like to thank Daniel Houser (the editor), an anonymous referee, Franklin Allen, Gennaro Bernile, Jeffrey Butler, Gonul Colak, Nam Huong Dau, Marco Pagano, Facundo Piguillem, Valerio Pot?, and participants at the French Finance Association meetings at the University of Li?ge, the European Financial Management Association meetings at Nyenrode University, and the International Atlantic Economic Society Best Undergraduate Paper Competition in Montreal for many helpful comments. Publisher Copyright: © 2021 The Author(s)
(Peer reviewed)
 
 
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