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Converting Odds to Probabilities with R

Jonas Christoffer Lindstrom has a new package:

Now you might think that converting decimal odds to probabilities should be easy, you can just use the definition above and take the inverse of the odds to recover the probability. But it is not that simple, since in practice using this simple formula will give you improper probabilities. They will not sum to 1, as they should, but be slightly larger. This gives the bookmakers an edge and the probabilities (which aren’t real probabilities) can not be considered fair, and so different methods for correcting this exists.

Read on to learn more about the problem and a few solutions. H/T R-Bloggers.