Late Informed Betting and the Favourite-Longshot Bias
According to the favorite-longshot bias observed in pari-mutuel betting, the final distribution of bets overestimates the winning chance of longshots. This Paper proposes an explanation of this bias based on late betting by small privately informed bettors. These bettors have an incentive to protect their private information and bet at the last minute, without knowing the bets simultaneously placed by the others. Once the distribution of bets is revealed, if bets are more informative than noisy, all bettors can recognize that the longshot is less likely to win than indicated by the distribution of bets.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Oct 2003|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
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.:
- Medrano, Luis Angel & Vives, Xavier, 2001.
"Strategic Behavior and Price Discovery,"
RAND Journal of Economics,
The RAND Corporation, vol. 32(2), pages 221-248, Summer.
- Medrano, Luis Angel & Vives, Xavier, 1997. "Strategic Behaviour and Price Discovery," CEPR Discussion Papers 1768, C.E.P.R. Discussion Papers.
- Luis Angel Medrano & Xavier Vives, 1998. "Strategic Behavior and Price Discovery," Harvard Institute of Economic Research Working Papers 1825, Harvard - Institute of Economic Research.
- Luis A. Medrano & Xavier Vives, 1997. "Strategic behavior and price discovery," Economics Working Papers 238, Department of Economics and Business, Universitat Pompeu Fabra.
- Hamilton, Jonathan H. & Slutsky, Steven M., 1990.
"Endogenous timing in duopoly games: Stackelberg or cournot equilibria,"
Games and Economic Behavior,
Elsevier, vol. 2(1), pages 29-46, March.
- Hamilton, J.H. & Slutsky, S.M., 1988. "Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria," Papers 88-4, Florida - College of Business Administration.
- Feeney, Rob & King, Stephen P., 2001. "Sequential parimutuel games," Economics Letters, Elsevier, vol. 72(2), pages 165-173, August.
- Koessler, Frédéric & Noussair, Charles & Ziegelmeyer, Anthony, 2008.
"Parimutuel betting under asymmetric information,"
Journal of Mathematical Economics,
Elsevier, vol. 44(7-8), pages 733-744, July.
- Frédéric KOESSLER & Anthony ZIEGELMEYER, 2002. "Parimutuel Betting under Asymmetric Information," Working Papers of BETA 2002-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Frédéric Koessler & Charles Noussair & Anthony Ziegelmeyer, 2008. "Parimutuel betting under asymmetric information," Post-Print halshs-00754275, HAL.
- Frederic Koessler & Charles Noussair & Anthony Ziegelmeyer, 2006. "Parimutuel Betting under Asymmetric Information," Papers on Strategic Interaction 2006-05, Max Planck Institute of Economics, Strategic Interaction Group.
- Frederic Koessler & Anthony Ziegelmeyer, 2004. "Parimutuel Betting under Asymmetric Information," Papers on Strategic Interaction 2003-34, Max Planck Institute of Economics, Strategic Interaction Group.
- Raymond D. Sauer, 1998. "The Economics of Wagering Markets," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2021-2064, December.
- Metrick, Andrew, 1996. "March madness? Strategic behavior in NCAA basketball tournament betting pools," Journal of Economic Behavior & Organization, Elsevier, vol. 30(2), pages 159-172, August.
- Crafts, Nicholas F R, 1985. "Some Evidence of Insider Knowledge in Horse Race Betting in Britain," Economica, London School of Economics and Political Science, vol. 52(27), pages 295-304, August.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:4092. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.