Decision-making under risk, betting
|Author:||Bc. Martin Herold|
|Year:||2014 - summer|
|Leaders:|| prof. RNDr. Jiří Hlaváček CSc.
|Work type:|| Bachelors
|Awards and prizes:||B.A. with distinction from the Dean of the Faculty of Social Sciences for an extraordinarily good bachelors diploma thesis.|
|Abstract:||The volume of money bet on the Czech market already exceeded one hundred billion and
continues to increase. Therefore, the demand for relevant analysis
concerning behaviour of
players grows. This thesis aims to study decision making under risk in the environment of gambling
and illuminates the discrepancies, provided risk averse consumers are the bettors. The thesis asks
the question why people are willing to participate in games with negative expected value and what
is their real motivation for gambling, what phenomena determine their view on betting opportunity
and how they cope with theoretical models. The theoretical part focuses on existing models of
decision making under risk theory and critically evaluates their ability to plausibly reflect reality.
Consequently, models such as the expected value, expected utility and prospect theory are
introduced, including other basic concepts. In the second section, socioeconomic determinants of
player's behaviour are evaluated, improving expected utility theory. In the final section, the thesis
demonstrates gathered evidence and possible improvements of the prospect theory model.
Although conclusions are not unequivocal, the work provides a comprehensive insight into the
utility theory and decision making under risk in an environment of betting