Playing Online Bookmaker Betting
It depends on the outcome. So, if we need to find out whether the coefficients are valid for equiprobable events (about 2), we just need to take an archive of such coefficients and check if they entered exactly half the time. In the case of a stock exchange, it is somewhat more difficult to determine the real value of an asset, so bookmaker markets are used in scientific research as a simplified model of financial markets. Therefore, putting odds on bookmakers is basically an attempt to predict what kind of quotes the majority of people will consider correct.
A good example is a game where the contestants must name a number that will be as close as possible to two-thirds of the average value of all attempts. If the numbers should be randomly chosen from the interval from 0 to 100, then the average value will be 50, and 2/3 of it will be 33 (the first level of thinking). But if all players think so and call this number, then the winning option is just two-thirds of 33, that is 22. If one of the players guessed this, then he has a second level of thinking. If all the players think at this level.
Continuing this chain to infinity, we come to the fact that the equilibrium value (according to the Nash criterion from the game theory) will be zero. Nash equilibrium is achieved when none of the participants in the game can increase their winnings by changing their strategy if other participants do not change their strategies. By the way, when Thaler held such a game for the Financial Times, 13 was the winning number. In the financial markets, something similar is happening. Sometimes traders try to predict the behavior of other traders, because of which some securities begin to unfairly fall in price, while others - to grow. We can assume that this also happens with bookmaker odds. And then we see their inexplicable growth or fall.
When the refutation of the effective market hypothesis was a key activity of the behavioral economics specialists, they also uncovered possible reasons for the fact that it does not work. In particular, the behavioral properties that lead to the emergence of a phenomenon called "mental accounting" (mental accounting, although its essence reflects the phrase "dual accounting" more accurately). It is he who prevents us from spending money wisely. Thaler discovered that people can differently perceive material resources (for example, money), depending on several factors: how many of them, in what form (money - cash or on a bank card), how they got (found or earned by hard work ), on which they can be spent.
The main behavioral properties that confuse us are the love of discounts, going hand in hand with the fact that we do not like to overpay or prepay for something that may not come in handy later. The first results in impulsive purchases of things that we acquire only because they have an attractive price, and not because we need them. This explains the endless sales in stores. Another component of "mental accounting" is non-recurrent costs. For example, by purchasing a subscription to a gym, a person starts to go there more often only because they have paid for it, although after a while his enthusiasm runs low, making it clear: the painful feeling that money is wasted for what you do not use at the end ends go by.
We also perceive overpay in different ways. One person sitting in the cabin of a low-budget airline was very eager to buy three small bottles of wine with a volume of one glass of 6 euro each, and at the same time complained that alcohol in English bars was too expensive. But against the backdrop (too high) of the cost of other goods on board the plane, this price did not seem too high to him, although one could suffer and purchase a full-sized bottle for 12 euros upon arrival. Nevertheless, when buying "coins" for 6 euros in an airplane, this person did not have a feeling that he overpaid.
Similarly, we can bet only because we want it, or we are overly optimistic in our forecasts, and not because the proposed coefficient actually has a preponderance over the line. Sometimes our emotions take precedence over cold calculation, and sometimes cognitive distortions that act like optical illusions, and we make the wrong decision based on our mistakes. In bets, you also need to be very careful in perceiving sunk costs. For example, you bet in November that Manchester United will win the Premier League. This should not bother you if in February, based on the changed information, you want to bet on another team. The main danger is that you can put more money than you should, just in order to repel the first bet.
If the economic behavior of people is irrational, but can be explained by behavioral factors, can this be used to push them to make certain decisions, even if they are unprofitable to them. Currently, it is widely used by the whole sphere of services and trade. Laying out goods in supermarkets, offering false alternatives in order to draw your attention to an option that would not interest you if there are none, and even tablets in hotels that ask you not to throw towels on the floor that you can still use (a common sign to the service staff , that they should be replaced with clean ones), ostensibly for the sake of protecting the environment from draining excess detergent into it - all this is based on the principles of the theory of pushing.
Be sure that bookmakers also actively use it, if they need to draw your attention to a match or a specific bet, even if you did not initially plan to do it. People are more inclined to make decisions, choosing ready-made variants from the proposed list, rather than inventing their own, and more often they agree to the option provided to them by default. If the bookmaker on his website puts out the list of the most popular rates of the day since even if nobody actually bet on them, then by the evening he will really get the most bets on the first items from this list. There is also a behavioral behavior that people often prefer to join the choice made before them by the majority.