6.5  On Some Facets of Betting: Comments

A standard proposition of the theory of choice under uncertainty is
that two individuals whose personal probabilities of a future event
differ can make a mutually advantageous wager. On the other hand,
empirical observation suggests that widespread betting is absent on
events where individuals' personal probabilities apparently differ
widely. Professor Hildreth's interesting paper suggests several
possible explanations of this inconsistency. Extending this analysis,
we look for answers in the nature of beliefs, the structure of markets
for wagers and the impact of market form on beliefs. In each case, we
must ask whether the postulated phenomenon is likely to be prevalent
in reality, and whether it is sufficient to imply the observed paucity
of wagers.