KRČÁL, Ondřej, Michal KVASNIČKA and Rostislav STANĚK. External validity of prospect theory: The evidence from soccer betting. Journal of Behavioral and Experimental Economics. 2016, vol. 65, No 5, p. 121-127. ISSN 2214-8043. doi:10.1016/j.socec.2016.07.005.
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Basic information
Original name External validity of prospect theory: The evidence from soccer betting
Authors KRČÁL, Ondřej (203 Czech Republic, guarantor, belonging to the institution), Michal KVASNIČKA (203 Czech Republic, belonging to the institution) and Rostislav STANĚK (203 Czech Republic, belonging to the institution).
Edition Journal of Behavioral and Experimental Economics, 2016, 2214-8043.
Other information
Original language English
Type of outcome Article in a journal
Field of Study 50200 5.2 Economics and Business
Country of publisher United States of America
Confidentiality degree is not subject to a state or trade secret
Impact factor Impact factor: 0.809
RIV identification code RIV/00216224:14560/16:00091978
Organization unit Faculty of Economics and Administration
UT WoS 000390511900014
Keywords in English Cumulative prospect theory; Betting market; Probability weighting; Loss aversion
Tags International impact, Reviewed
Changed by Changed by: Ing. Michal Kvasnička, Ph.D., učo 847. Changed: 17/3/2021 10:58.
This paper tests whether the prospect theory parameters estimated from laboratory experiments correspond to estimates from real-life betting markets. Using Czech soccer betting data, we estimate the functional forms of the value and probability weighting functions commonly used for the experimental validation of prospect theory. In line with the experimental evidence, we find that bettors are risk averse in the domain of gains and risk seeking in the domain of losses and tend to overweight small probabilities and underweight medium and large probabilities. On the other hand, our findings suggest that bettors do not exhibit loss aversion. This might be at least partly explained by recent experimental evidence suggesting that loss aversion is weaker or absent if the decision-makers are experienced, if they face similar choices repeatedly, and if the decisions are made in a context where offers are usually accepted.
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