Home Bias and Prediction Markets: Evidence from the Racetrack
AbstractSignificant horse races taking place in Britain and France frequently involve participants from both countries. The existence of distinct and segmented wagering markets in each country facilitates the study of potentially different market behaviors. Using over eight hundred observations from these markets, I show the existence of a pronounced home bias, with participants in domestic markets favoring horses trained domestically. The bias is large, statistically significant, and becomes more pronounced as betting odds rise. Restricting the analysis to foreign trained horses that have already performed well in domestic races, I find the bias virtually disappears suggesting a role for learning and informational asymmetries.
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Bibliographic InfoPaper provided by Trinity College Dublin, Department of Economics in its series Trinity Economics Papers with number tep2211.
Length: 13 pages
Date of creation: Dec 2011
Date of revision:
Home bias; Prediction Markets; Market efficiency;
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-18 (All new papers)
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