The objective of this chapter is to review and extend an emerging body of research that tests theories, models, and general predictions of human behavior—most of which are rooted in psychology—while using the point spread wagering market as the setting. The bridge between behavioral psychology and sports betting is provided by the growing field of behavioral finance, a relatively new subdiscipline of behavioral economics.
This chapter is concerned with exploring individuals’ motivations for betting and other aspects of their behavior as bettors. These topics have generated a substantial literature over the past four decades. While the study of betting behavior has been dominated by the lens of economic analysis, it has also garnered the attention of psychologists, sociologists, and those interested in designing the legal and regulatory regimes within which betting takes place or those tasked with addressing and treating the negative effects of excessive exposure to betting from a medical or social care perspective.
This chapter gives an overview of the many compelling ethical issues and debates among moral philosophers that pertain to money in general and financial activities in particular. It gives some background by way of introducing ontological ideas about what money and finance is. Thereafter, the chapter starts by discussing some of the classic and sweeping criticisms to the effect that all (or at least most) financial activities are morally suspect, for example criticisms of usury and speculation. The following section assumes that the existence of financial markets can be acceptable and discusses some of the ethical issues involved in making them honest and fair, for example the challenges of deception and insider trading. Finally, the chapter discusses ideas to the effect that financial agents have social responsibilities that go beyond their role as market participants, for example an extended responsibility to promote social welfare. The overarching aim of the chapter is to help further establish the new field of “financial ethics.”
Betting markets are diverse but share several distinguishing traits. Generally, they are open for short periods and have an endpoint that relates to an event whose occurrence (but not outcome) is known in advance. Due to substantial operating fees and taxes, betting is a less-than-zero-sum transaction, and there are limited opportunities to sell securities or to arbitrage positions. Betting markets, then, are very different from financial markets, which trade long-lived securities whose values are set by events conducted in private and that have sophisticated participants on both buy and sell sides and parallel derivatives markets. So what motivates those that take part in betting markets?