Gustav Axén: Results on Betting Markets and Portfolios
Time: Fri 2017-06-16 10.00 - 11.00
Location: Room 32, house 5, Kräftriket, Department of Mathematics, Stockholm University
Participating: Gustav Axén (BSc student)
Abstract: We build a model of a betting market through studying an integrated model of a bookmaker and a betting exchange. We find a solution in which we can vary the preferences of the bettors and the costs of the bookmaker/exchange within very general conditions and still obtain a result, suggesting generality of our model. In addition, we derive a few results on betting from the perspective of the individual and consider the implications of betting against events, which is more complicated in our model than betting for events. Among other things, we also find a procedure in which an individual can make money by predicting changes in odds without necessarily predicting the event.