The Attitudes Towards Risk of Racetrack Bettors.

We investigate in this paper the attitude towards risk of bettors in British horce races. The model we use allows us to go beyond the expected utility framework and to explore various alternative proposals by estimating a multinomial model on 34443-race dataset. We find that rank-dependant utility models do not fit the data better than expected utility models. On the other hand, cumulative prospect theory has higher explanatory power. Our preferred estimates suggest a pattern of local risk-aversion similar to that proposed by Friedman-Savage.INFORMATION ; ECONOMETRICS