An Exception to the Risk Preference Anomaly

The theory of risk bearing implies risk aversion. In every published study of horse race betting known to the authors, however, investigators reject this implication in favor of "ri sk-loving" behavior. Using the techniques of these studies, the auth ors examine a new data set from Hong Kong and find a rather different result: Hong Kong bettors seem to be either risk neutral or risk ave rse. A striking difference between the Hong Kong data and the previou sly studied North American data is the much larger betting volume per race.