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A model of casino gambling / Nicholas Barberis in Management science, Vol. 58 N° 1 (Janvier 2012) 

Public ISBD [article]  in Management science > Vol. 58 N° 1 (Janvier 2012) . - pp. 35-51 Titre : A model of casino gambling Type de document : texte imprimé Auteurs : Nicholas Barberis, Auteur Année de publication : 2012 Article en page(s) : pp. 35-51 Note générale : Management Langues : Anglais (eng) Mots-clés : Gambling  Prospect  theory  Time  inconsistency  Probability  weighting Résumé : We show that prospect theory offers a rich theory of casino gambling, one that captures several features of actual gambling behavior. First, we demonstrate that for a wide range of preference parameter values, a prospect theory agent would be willing to gamble in a casino even if the casino offers only bets with no skewness and with zero or negative expected value. Second, we show that the probability weighting embedded in prospect theory leads to a plausible time inconsistency: at the moment he enters a casino, the agent plans to follow one particular gambling strategy; but after he starts playing, he wants to switch to a different strategy. The model therefore predicts heterogeneity in gambling behavior: how a gambler behaves depends on whether he is aware of the time inconsistency; and, if he is aware of it, on whether he can commit in advance to his initial plan of action. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/58/1/35.abstract [article] A model of casino gambling [texte imprimé] / Nicholas Barberis, Auteur . - 2012 . - pp. 35-51. Management Langues : Anglais (eng) in Management science > Vol. 58 N° 1 (Janvier 2012) . - pp. 35-51 Mots-clés : Gambling  Prospect  theory  Time  inconsistency  Probability  weighting Résumé : We show that prospect theory offers a rich theory of casino gambling, one that captures several features of actual gambling behavior. First, we demonstrate that for a wide range of preference parameter values, a prospect theory agent would be willing to gamble in a casino even if the casino offers only bets with no skewness and with zero or negative expected value. Second, we show that the probability weighting embedded in prospect theory leads to a plausible time inconsistency: at the moment he enters a casino, the agent plans to follow one particular gambling strategy; but after he starts playing, he wants to switch to a different strategy. The model therefore predicts heterogeneity in gambling behavior: how a gambler behaves depends on whether he is aware of the time inconsistency; and, if he is aware of it, on whether he can commit in advance to his initial plan of action. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/58/1/35.abstract