Quote:
Originally Posted by zerosky
A 4/1 horse on the tote board can be converted into the public's subjective probability of winning by removing the effects of the takeout.
P(pub)= (1-t)/(odds+1)
so if takeout is 16% then P(pub)= 0.84/5 =16.8%
If you believe its real chance of winning is 2/1 the the calculation of the probability does not involve take out (it will win one in three times) therefore P(your)= 33%
In this particular instance the whole line is probably out of whack due to a false favourite or something, or you have privileged information hidden from the public.
In the long term you would have to compare your odds with the public odds over the same selections to see if you really do have an edge. A good method would be to compute the Brier Score or Brier Skill Score.
http://www.statisticshowto.com/brier-score/ |
A Brier score is an affine transform of the quadratic scoring rule. There are also logarithmic and spherical scoring rules as well. The Brier score has some shortcomings should be used cautiously with respect to very rare (or frequent) event data.
