In recent years leading figures in a variety of fields - political, financial, medical, and organizational - have become acutely aware of the need to effectively incorporate aspects of risk into their decision-making. This book addresses a wide range of contemporary issues in decision research, such as how individuals deal with uncertainty and complexity, gender-based differences in decision-making, what determines decision performance and why people choose risky activities.The book presents results from academic research carried out over the last twenty years. A common theme is the study of decisions made in horserace betting markets, a research medium which offers a rich insight into decision-making in general and one which enjoys particular methodological advantages over laboratory-based simulations. This set of naturalistic studies explores the variety of individual motivations for betting, how people perceive and respond to the presence of uncertainty, the challenges of complex and turbulent information and the use of heuristics as a response, how decision-making performance is affected by structural or process-related features of the decision environment, and how men and women differ in their decision behaviour.The authors’ interesting and novel findings offer a richer understanding of the psychological and economic underpinnings of betting behaviour which should inform practitioners, policymakers and regulators in an industry which is undergoing unprecedented global growth. The book is also relevant to courses covering subject areas such as financial markets, decision-making and behavioural finance.
Author(s): Johnnie Johnson
Edition: 1
Year: 2008
Language: English
Pages: 400
Book Cover......Page 1
Title......Page 6
Copyright......Page 7
Contents......Page 8
Illustrations......Page 11
Contributors......Page 14
Preface......Page 15
Acknowledgements......Page 22
Part I: Motivation for betting and risk taking......Page 26
1 Towards an explanation of betting as a leisure pursuit......Page 30
2 Costing excitement in leisure betting......Page 50
3 Successful betting strategies: Evidence from the UK off-course betting market......Page 67
Part II: The impact of complexity on decision-making behaviour......Page 84
4 The complex decision: Insights from naturalistic research......Page 88
5 An empirical study of the impact of complexity on participation in horse-race betting......Page 99
6 A probit model for estimating the effect of complexity on risk taking......Page 111
7 Risk strategy under task complexity: A multivariate analysis of behaviour in a naturalistic setting......Page 121
8 Decision-making under risk: Effect of complexity on performance......Page 142
Part III: Gender differences in decision-making behaviour......Page 152
9 Gender and DSS design: The research implications......Page 156
10 Male and female betting behaviour – new perspectives......Page 197
11 Gender-based differences in leisure behaviour: Performance, risk taking and confidence in off-course betting......Page 209
12 Decision-making, risk and gender: Are managers different?......Page 223
Part IV: The use of information by decision-makers and deviations from rational economic behaviour......Page 246
13 A violation of dominance and the consumption value of gambling......Page 254
14 Exploring decision-makers’ use of price information in a speculative market......Page 275
15 Gluck’s Second Law: An empirical investigation of horserace betting in early and late races......Page 294
16 Investigating the roots of the favourite–longshot bias: An analysis of decision-making by supply- and demand-side agents in parallel betting markets......Page 302
17 Market efficiency analysis requires a sensitivity to market characteristics: Some observations on a recent study of betting market efficiency......Page 325
18 Efficiency characteristics of a market for state-contingent claims......Page 330
19 Market ecology and decision behaviour in state-contingent claims markets......Page 336
20 Calibration of subjective probability judgements in a naturalistic setting......Page 358
Index......Page 384
