IDEAS home Printed from https://ideas.repec.org/a/bla/econom/v73y2006i292p673-689.html
   My bibliography  Save this article

Market Efficiency in Person‐to‐Person Betting

Author

Listed:
  • MICHAEL A. SMITH
  • DAVID PATON
  • LEIGHTON VAUGHAN WILLIAMS

Abstract

Bookmakers have argued that person‐to‐person internet ‘betting exchanges’ represent unfair competition. In this paper we suggest that, in fact, betting exchanges have brought about significant efficiency gains by lowering transaction costs for consumers. We test this hypothesis using matched data on UK horse racing from betting exchanges and from traditional betting media. In comparison with traditional betting media, we find that betting exchanges exhibit evidence of significantly lower market biases. We also find that an information‐based model explains the well documented favourite–longshot bias more convincingly than traditional explanations based on risk preferences.

Suggested Citation

  • Michael A. Smith & David Paton & Leighton Vaughan Williams, 2006. "Market Efficiency in Person‐to‐Person Betting," Economica, London School of Economics and Political Science, vol. 73(292), pages 673-689, November.
    • Handle: RePEc:bla:econom:v:73:y:2006:i:292:p:673-689
    DOI: 10.1111/j.1468-0335.2006.00518.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-0335.2006.00518.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1468-0335.2006.00518.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:econom:v:73:y:2006:i:292:p:673-689. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.