Insider Trading, Herding Behaviour and Market Plungers in the British Horse-Race Betting Market
AbstractCrafts (1985) suggested that a pronounced shortening of bookmaker odds in horse-race betting markets could indicate the presence of insider traders. This paper uses the Shin (1993) measure of the incidence of insider trading at the beginning of the betting period (opening prices) and at the end of it (starting prices) to distinguish the shortening of odds caused by insider trading from that caused by herding behaviour. It turns out that significant positive betting returns are achieved when shortening odds are accompanied by a rise in the Shin measure; when they are accompanied by a fall, returns are negative, suggesting herd behaviour. Copyright 2002 by The London School of Economics and Political Science
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 69 (2002)
Issue (Month): 274 (May)
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- Smith, Michael A. & Paton, David & Williams, Leighton Vaughan, 2009. "Do bookmakers possess superior skills to bettors in predicting outcomes?," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 539-549, August.
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- Stefan Winter & Martin Kukuk, 2008. "Do horses like vodka and sponging? - On market manipulation and the favourite-longshot bias," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 75-87.
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