Lesson 06 · 4 min read
Favorites, long shots, and why the odds have to add up
When a question has many answers, the answers share one pie.
Some questions have a list of answers: who wins the league, who wins the match, whether it's a draw. Every answer is its own market, and because exactly one of them will happen, their prices should add up to about one dollar.
That gives you a free check. Add up the favorites. If the list sums well over a dollar, some of them are too expensive. If it sums under, something is cheap, or the 'other' answer is being ignored.
Long shots are where people are most often wrong in the same direction: they overpay for the thrill. Favorites are more boring and more often fairly priced. Being right on a favorite pays less, but it pays more often.
There's always an 'other' answer for anything nobody listed yet. Early in a season it's worth more than it looks.
Try this
Add the prices of the top four answers to a winner question. Compare the sum to 1. That gap is the first thing to think about.