Originally <a href='/showthread.php?p=17062644'>posted</a> on 12/09/2012:

Quote Originally Posted by MD View Post
I've always known that, mathematically, hedging parlays reduces your long-term profit, but I wasn't aware of the math behind it until about a month ago when I saw Nunya discuss the topic, stating that hedging parlays is a losing play, and decided to look into it a bit more; it's a common mistake.

You're generally better off not even playing the leg of the parlay that you intend to hedge, rather than play it and then hedge it. In the long term, it can significantly dent your profit. I looked into the subject extensively and the one possible exception I found was in large (selection-wise, not money-wise) parlays, as I can't find solid math to prove that hedging large parlays is fundamentally unsound. I say I "can't", but I suppose it'd be better to say I "didn't", as I didn't exactly search for this math very hard.

Utility Theory is what you're looking for.

Hedging large parlays (or any plays) can occasionally be correct if, a) your bankroll has diminished since the play was initiated, b) new information has come in that changes your mind about the EV of the play or c) if the hedge was a mathematically sound part of your initial play. (For example betting Easton at openers knowing the line was going to move in order to extract a better price on Assuncao later).