The Optimality and Statistical Detection of Price Rigging in Betting Markets
The purpose of this paper is to determine empirically whether or not there is systematic price rigging in three Australian betting markets: Horse, harness and greyhound racing. We present a simple model which shows the conditions under which it is optimal for insiders to rig prices by deliberate underperformance in some races. We then show how an empirical analysis of the relationship between win and place probabilities in conjunction with observed patterns of betting behavior, may be used to establish the presence of price rigging. It is shown that there is no significant systematic price rigging in these markets.
Volume (Year): 1 (2007)
Issue (Month): 1 (February)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
- Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," NBER Working Papers 9413, National Bureau of Economic Research, Inc.
- Figlewski, Stephen, 1979. "Subjective Information and Market Efficiency in a Betting Market," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 75-88, February.
- Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 843-877.
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