Efficient market adjustment of odds prices to reflect track biases
Article Abstract:
Many financial markets feature biases that reflect the economic value of uncertain contingent claims. Racetrack parimutuel betting is one such market for which sufficient data is available to examine such biases, with an estimated $10 million wagered annually in North America alone. Racetrack configuration results in an advantage for horses that break from post positions near the rail, especially when a track has a small circumference. Data from 3,345 races involving over $300 million in 1982, 1983, and 1984 wagers on exotic and win bets at Vancouver's Exhibition Park confirmed that a bias exists, but that price adjustments fully negate any potential gains resulting from the bias.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1987
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Gaussian influence diagrams
Article Abstract:
Influence diagram models are developed for representing and analyzing linear-quadratic-Gaussian models. Arcs and nodes are used to represent probabilistic dependence and numerous variables, respectively. The diagram simplifies the assigning of multivariate normal distribution parameters and the assessing of positive semi-definitive covariance matrices. Algorithms are developed for translating between covariance matrix representations and Gaussian influence diagrams.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1989
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Estimation uncertainty and optimal advertising decisions
Article Abstract:
The implications of advertising decision makers' reliance on estimated relationships in reaching resource allocation decisions are examined using a normative model. Results indicate that suboptimal decisions are often made because the uncertainty resulting from the use of sample estimates of population parameters is ignored.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1989
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