Atl Econ J (2018) 46:135–136 https://doi.org/10.1007/s11293-017-9562-6 ANTHOLOGY Can an Outcome’s Cumulative Probabilities Exceed 1? Only in Vegas! 1 1 1 Ladd Kochman & David Bray & Ken Gilliam Published online: 28 December 2017 International Atlantic Economic Society 2017 JEL E47 Z20 A probability distribution refers to the way in which the total probability of 1 (or 100%) is distributed over various possible outcomes. A discrete probability distribution is characterized by outcomes that are countable and limited. The most common applica- tions include flipping a coin and rolling dice. Even bookmakers’ odds, when converted to probabilities, can serve as an example. According to the opening odds from the Westgate Las Vegas SportsBook, the odds of the Chicago Cubs winning the 2017 World Series were 3-to-1 (www.espn.com). By dividing 1 by (3 + 1), we can derive a probability of 0.25 (25%) that the Cubs will win out. Other teams with relatively short odds were the Los Angeles Dodgers, the Washington Nationals and the Boston Red Sox (all 10-to-1 or 0.0909). The lowest-rated clubs were the Arizona Diamondbacks, the Milwaukee Brewers, the Minnesota Twins, the Los Angeles Angels, the Atlanta Braves, the Oakland Athletics, the San Diego Padres, the Cincinnati Reds
Atlantic Economic Journal – Springer Journals
Published: Dec 28, 2017
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