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Efficiency of Betting Markets and Rationality of Players: Evidence from the French 6/49 Lotto

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Author Info

  • Patrick Roger
  • Marie-Helene Broihanne

Abstract

We analyse the existence of preferred numbers on the French Lotto market and prove that this market is not strongly efficient in the sense of Thaler & Ziemba (1988). The preference for low numbers is investigated by means of stochastic dominance tests. The specific features of the French Lotto game allow us to build a simple estimate of the probability distribution of numbers actually played. The results are compared with the (highly time-consuming) maximum likelihood estimator used by Farrell et al. (2000). It is shown that the two methods give very close results. Our conclusions stress the perspectives of this study in various domains.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Applied Statistics.

Volume (Year): 34 (2007)
Issue (Month): 6 ()
Pages: 645-662

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Handle: RePEc:taf:japsta:v:34:y:2007:i:6:p:645-662

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Related research

Keywords: Lotto; pari-mutuel; information efficiency; maximum likelihood estimation;

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Cited by:
  1. Humphreys, Brad & Perez, Levi, 2011. "Lottery Participants and Revenues: An International Survey of Economic Research on Lotteries," Working Papers 2011-17, University of Alberta, Department of Economics.
  2. Andrey Kudryavtsev & Gil Cohen & Shlomit Hon-Snir, 2013. "“Rational” or “Intuitive”: Are Behavioral Biases Correlated Across Stock Market Investors?," Contemporary Economics, University of Finance and Management in Warsaw, University of Finance and Management in Warsaw, vol. 7(2), June.
  3. George Papachristou, 2004. "The British gambler's fallacy," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(18), pages 2073-2077.

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