I agree fully that bookies are in the business to make money, but there is more to the odds simply the likelihood of the outcome. I would assume that there are people similar to insurance companies who are there to work out the risk of a particular outcome, and a marketing department who want people to place bets. No one will place a bet if the odds are too long, likewise shortening the odds of someone that has a lot of bets is also wise, as you would be mitigating your risk. The odds for England at a worldcup would be a good example I believe.
Bookies cannot afford to be sentimental, so there would be little room for bias in their judgements, more the bias in the betting will dictate the risk, and they react accordingly. If there were suddenly a massive amount of money put on Karthikeyan for example there would be little need to adjust, however, if the same amount of money were put on Rosberg, I suspect his odds would significantly shorten, but not as much as Vettels.
So in my opinion, the odds are a blend of statistical analysis, careful risk management, public opinion, and guesswork. But I guess everyone knows that, right? THey could be seen as representative of what is likely to happen in many cases, although last seasons odds I recall were 16/1 for JB and 4/1 for LH and 3/2 for SV, at the start of the season, this season LH is at 6/1, which I think is a bit long, SV at 20/21 so no real money in it, JB at 9/1, quite a bit shorter than last year, and a lot closer to Lewis, and MW is at 17/1, where iirc he was less than 10/1 last season.
It would seem that the best bet would be a fiver on MW as an outside bet.
It will be interesting to see how the odds change after the first race.
