Herding in Imperfect Betting Markets with Inside Traders
AbstractHerding is often considered as a phenomenon that drives prices of risky assets away from their equilibrium levels. In this paper we study the on-course UK and Australian horse betting markets. These are simple examples of imperfect markets for state-contingent assets. We provide strong evidence of herding behavior and show that the effects of herding are occasionally sufficient to render the markets inefficient even in the weak sense. Furthermore, the results demonstrate that traders with inside information are not always able to arbitrage away the effects of herding.
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Bibliographic InfoArticle provided by University of Buckingham Press in its journal Journal of Gambling Business and Economics.
Volume (Year): 2 (2008)
Issue (Month): 2 (September)
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Web page: http://www.ubpl.co.uk/
Find related papers by JEL classification:
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
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- Adi Schnytzer & Martien Lamers & Vasiliki Makropoulou, 2009.
"The Impact of Insider Trading on Forecasting in a Bookmakers' Horse Betting Market,"
2009-11, Department of Economics, Bar-Ilan University.
- Schnytzer, Adi & Lamers, Martien & Makropoulou, Vasiliki, 2010. "The impact of insider trading on forecasting in a bookmakers' horse betting market," International Journal of Forecasting, Elsevier, vol. 26(3), pages 537-542, July.
- Adi Schnytzer & Martien Lamers & Vasiliki Makropoulou, 2011. "The Impact of Insider Trading on Forecasting in a Bookmakers' Horse Betting Market," Working Papers 2011-14, Department of Economics, Bar-Ilan University.
- A. Schnytzer & M. Lamers & V. Makropoulou, 2009. "The Impact of Insider Trading on Forecasting in a Bookmakers' Horse Betting Market," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 09/627, Ghent University, Faculty of Economics and Business Administration.
- John Peirson, 2008. "Expert Analysis and Insider Information in Horse Race Betting: Regulating Informed Market Behaviour," Studies in Economics 0819, Department of Economics, University of Kent.
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