Surprised by the Parimutuel Odds?
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › fagfællebedømt
Dokumenter
- aer.99.5.2129
Forlagets udgivne version, 207 KB, PDF-dokument
Empirical analyses of parimutuel betting markets have documented that market probabilities of favorites (longshots) tend to underestimate (overestimate) the corresponding empirical probabilities. We argue that this favorite-longshot bias is consistent with bettors taking simultaneous positions on the basis of private information about the likelihood of different outcomes. The ex post realization of a high market probability indicates favorable information about the occurrence of an outcome -- and the opposite is true for longshots. This explanation for the bias relies on the bettors' inability to incorporate the surprise revealed by the final odds.
Originalsprog | Engelsk |
---|---|
Tidsskrift | American Economic Review (Print Edition) |
Vol/bind | 99 |
Udgave nummer | 5 |
Sider (fra-til) | 2129-2134 |
Antal sider | 6 |
ISSN | 0002-8282 |
DOI | |
Status | Udgivet - dec. 2009 |
Bibliografisk note
JEL classification: D81, D82, L83
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