Gandar, John M Zuber, Richard A Johnson, R Stafford
Abstract
This paper tests for the presence of the favourite-longshot bias in a new setting. This bias--the tendency for bettors to underbet favourites and overbet longshots--has been found in most studies of pari-mutuel and bookmaking betting markets in the USA, the UK and Australia. However, there is growing evidence that in at least some pari-mutuel betting markets there is no favourite-longshot bias. This paper examines the previously unexplored New Zealand pari-mutuel betting market on horse races for evidence of this bias. Utilizing a large sample of recent New Zealand thoroughbred horse races, it is found that while early, off-track bettors price this bias into odds, late (on- and off-track) bettors eliminate much of the bias by the close of betting. That is, the results reinforce the view that not all pari-mutuel betting markets are characterized by a favourite-longshot bias at the close of betting. Evidence is also found that late bettors in this market are smart bettors. Copyright 2001 by Taylor and Francis Group
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Article provided by Taylor and Francis Journals in its journal Applied Economics.
Volume (Year): 33 (2001) Issue (Month): 13 (October) Pages: 1621-29 Download reference. The following formats are available: HTML,
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