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on Sports and Economics |
| By: | Bhunia, Soumyajit |
| Abstract: | Game theory offers a structured framework for analyzing strategic decision making. This paper is trying to examine strategic decision-making in cricket, where both the teams aim to maximize their outcomes in a competitive environment. By examining payoffs, probabilities, and opponent strategies, we investigate the interplay between possible risk and reward, bolstering to more informed and effective tactics in the match. |
| Keywords: | strategic decision, cricket, pay-offs, risk |
| JEL: | A1 C7 C70 Y1 |
| Date: | 2025–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126153 |
| By: | Whelan, Karl |
| Abstract: | Betting exchanges match people to take opposite sides of a bet. We present a model of a betting exchange in which participants disagree about outcome probabilities but are, on average, correct. Traders maximize subjective expected profits and equilibrium emerges from a simple matching process. The model predicts those who post quotes (Makers) will earn higher returns than those who accept them (Takers) and that loss rates for Takers will rise as the probability of their accepted bet winning falls. Using a large sample of bets on soccer from Betfair Exchange, we implement a transaction-level empirical strategy that identifies Maker and Taker sides of each trade. We show that pre-match and early in-play behavior aligns closely with the model’s predictions. However, as matches progress, behavior shifts: longshot bets generate large, systematic losses even for liquidity providers, and profits emerge for those who accept offers on favorites. |
| Keywords: | Betting Exchanges, Bid-Ask Spreads, Betfair, Matching, Thick and Thin Markets |
| JEL: | D83 G14 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126351 |
| By: | Sumit Goel; Yiqing Yan; Jeffrey Zeidel |
| Abstract: | We study the effect of interim feedback policies in a dynamic all-pay auction where two players bid over two stages to win a common-value prize. We show that sequential equilibrium outcomes are characterized by Cheapest Signal Equilibria, wherein stage 1 bids are such that one player bids zero while the other chooses a cheapest bid consistent with some signal. Equilibrium payoffs for both players are always zero, and the sum of expected total bids equals the value of the prize. We conduct an experiment with four natural feedback policy treatments -- full, rank, and two cutoff policies -- and while the bidding behavior deviates from equilibrium, we fail to reject the hypothesis of no treatment effect on total bids. Further, stage 1 bids induce sunk costs and head starts, and we test for the resulting sunk cost and discouragement effects in stage 2 bidding. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.23178 |
| By: | Markus Dertwinkel-Kalt; Hans-Theo Normann; Jan-Niklas Tiede; Tobias Werner |
| Abstract: | Consumers often face products sold as lotteries rather than fixed outcomes. A prominent case is the loot box in video games, where players pay for randomized rewards. We investigate how presentation formats shape consumer beliefs and willingness to pay. In an online experiment with 802 participants, sellers could frame lotteries using two common manipulations: censoring outcome probabilities and selectively highlighting rare successes. More than 80\% of sellers adopted such deceptive frames, particularly when both manipulations were available. These choices substantially inflated buyer beliefs and increased willingness to pay of up to six times the expected value. Sellers anticipated this effect and raised prices accordingly. Our results show how deceptive framing systematically shifts consumer beliefs and enables firms to extract additional surplus. For marketing practice, this highlights the strategic value of framing tools in probabilistic selling models; for policy, it underscores the importance of transparency requirements in protecting consumers. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.01597 |