In gambling and economics, there’s an observed phenomenon favorite-long shot bias.
Here’s how it works …
On average, bettors tend to overvalue “long shots” and undervalue favorites.
That is, in a horse race where one horse is given odds of 2-to-1, and another 100-to-1, the true odds might for example be 1.5-to-1 and 300-to-1 respectively.
Betting on the “long shot” is therefore a much worse proposition than betting on the favorite.
Various theories exist to explain why people willingly bet on such losing propositions, such as risk-loving behavior, or simply inaccurate estimation.
The Homa Files 
March 27, 2014 at 8:20 am |
I wonder if the amount of the bet is a factor. For example, it is barely worth my time to make a $5 bet that pays off $7.50. However, there is the draw or excitement of betting only $5 and getting back $500. While I would never bet thousands of dollars on 100 to 1 odds, I bet I would, and have, made a $5 bet on the same odds.