fair odds

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The odds which would leave anybody betting on a random event with 0 expected gain or loss. Thus, if the probability of the occurrence of a random event is p then the fair odds are (1 − p) to p. If, for example, p = 1/3, then the fair odds are (1 − 1/3) to 1/3 or 2 to 1. Conversely, if the fair odds for a random event are a to b, then the probability of winning is b/(a + b).

Subjects: Economics.

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