This paper investigates fundamental investment strategies to detect and exploit the public's systematic errors in horse race wager markets. A handicapping model is developed and applied to win-betting in the pari-mutuel system. A multinomial logit model of the horse racing process is posited and...

In previous work, thresholds have been introduced to describe situations where the consumer is indifferent between any two alternatives. Krishnan (Krishnan, K. S. 1977. Incorporating thresholds of indifference in probabilistic choice models. Management Sci. 23 (July) 1224--1233.) formalised...