Southampton Management School

David McDonald

MMath

Primary position:
Postgraduate Research Student

Awarded full EPSRC scholarship.
Awarded £1.3k School of Management PhD student pump priming conference grant (2009).

Mr David McDonald's photo

The University of Southampton's electronic library (e-prints)

Book Section

McDonald, David, Sung, M. and Johnson, J.E.V. (2011) Evidence of biased behaviour in betting markets. In, The Economics of Gambling. Oxford, GB, Oxford University Press. (In Press)

Conference or Workshop Item

McDonald, David, Sung, Ming-Chien and Johnson, Johnnie E.V. (2011) The effects of increased volatility and herding behavior on the efficiency of a speculative financial market. In, The 19th Conference on the Theories and Practices of Securities and Financial Markets, Kaohsiung City, TW, 09 - 10 Dec 2011.
McDonald, David, Sung, Ming-Chien and Johnson, Johnnie E.V. (2011) Exploring the degree of predecisional bias displayed by participants in a speculative financial market. In, Business and Economics Society International Conference, Split, HR, 06 - 09 Jul 2011.
McDonald, D., Sung, M. and Johnson, J.E.V. (2011) Favourite-longshot bias in competing betting markets. In, International Conference on Gambling Studies, Nottingham, GB, 03 - 05 Apr 2011. 35pp.
McDonald, David, Sung, Ming-Chien and Johnson, Johnnie (2010) Modelling predecisional bias in a speculative financial market. In, EURO XXIV- 24th European Conference on Operational Research, Lisbon, PT, 11 - 14 Jul 2010.
McDonald, D. C. J., Sung, Ming-chien and Johnson, J. E. V. (2009) Forecasting market inefficiency in competitive events: estimating the winning probabilities of strong favourites. In, The 29th Annual International Symposium on Forecasting, Hong Kong, China, 22 - 25 Jun 2009.
McDonald, D.C.J., Sung, M. and Johnson, J.E.V. (2009) A reinterpretation of the favourite-longshot bias: estimating the winning probabilities of strong favourites. In, The 14th International Conference on Gambling and Risk Taking, Reno, USA, 25 - 29 May 2009.
 

Research Interests

Title of research project: Biased decision-making in a naturalistic environment: Implications for forecasts of competitive events.

Decision-makers are often susceptible to judgemental biases, but most research has been laboratory-based. The purpose of this study is to examine whether decision-makers are biased to the same extent in naturalistic environments. Betting markets offer a valuable real-world setting, encompassing many features that are of interest to studies into decision-making: high stakes, uncertain information and time pressure. This study examines three decision making-biases:

-Predecisional bias: adjustment of the evaluation of choice-related attributes to favour the leading option.
-Favourite-longshot bias: under-estimation of high probability outcomes, and over-estimation of low probability outcomes.
-Herding: adjustment of judgements to be more representative of commonly-held beliefs.

The study also involves:

-An investigation of new indicators derived from past prices and whether these can be used to show that decision-makers do not employ all available price-related information, particularly information that involves a higher degree of complexity.
-Development of existing models, to more effectively explore decision-making bias in betting markets.
-An examination of betting exchanges, which are a relatively new type of betting market.

Primary research group:  Centre for Risk Research

Mr David McDonald
School of Management
University of Southampton
Southampton
SO17 1BJ, UK.