The University of Southampton
University of Southampton Institutional Repository

An examination of the determinants of biased behaviour in a market for state contingent claims

An examination of the determinants of biased behaviour in a market for state contingent claims
An examination of the determinants of biased behaviour in a market for state contingent claims
We develop a model to explain the differential incidence of the favourite-longshot bias in parallel sectors of the pari-mutuel horserace betting market. Hypotheses are derived from the model and these are tested, using UK data, to explore the origins of the bias. Significant variations in the bias are discovered between market sectors on- and off-racetrack. These results shed light on competing demand-side explanations for the favourite-longshot bias and suggest that it is affected by a combination of behavioural and operational features of the markets and the types of bettors (informed and leisure) which they attract.
market efficiency, favourite-longshot bias, betting markets
0013-0427
282-303
Bruce, Alistair C.
acee9acc-fd28-44bf-8781-7a9d135319ac
Johnson, Johnnie E.V.
6d9f1a51-38a8-4011-a792-bfc82040fac4
Peirson, John D.
4a82b240-f6fe-4b44-bae6-eb1ef84d8bea
Yu, Jiejun
ad186cba-9755-43ef-8611-087fe72f8293
Bruce, Alistair C.
acee9acc-fd28-44bf-8781-7a9d135319ac
Johnson, Johnnie E.V.
6d9f1a51-38a8-4011-a792-bfc82040fac4
Peirson, John D.
4a82b240-f6fe-4b44-bae6-eb1ef84d8bea
Yu, Jiejun
ad186cba-9755-43ef-8611-087fe72f8293

Bruce, Alistair C., Johnson, Johnnie E.V., Peirson, John D. and Yu, Jiejun (2009) An examination of the determinants of biased behaviour in a market for state contingent claims. Economica, 76 (302), 282-303. (doi:10.1111/j.1468-0335.2008.00741.x).

Record type: Article

Abstract

We develop a model to explain the differential incidence of the favourite-longshot bias in parallel sectors of the pari-mutuel horserace betting market. Hypotheses are derived from the model and these are tested, using UK data, to explore the origins of the bias. Significant variations in the bias are discovered between market sectors on- and off-racetrack. These results shed light on competing demand-side explanations for the favourite-longshot bias and suggest that it is affected by a combination of behavioural and operational features of the markets and the types of bettors (informed and leisure) which they attract.

Text
Economica.pdf - Version of Record
Restricted to Repository staff only
Request a copy

More information

Published date: April 2009
Venue - Dates: The Growth of Gambling and Prediction Markets: Economic and Financial Implications, United States, 2007-05-20 - 2007-05-22
Keywords: market efficiency, favourite-longshot bias, betting markets
Organisations: Management

Identifiers

Local EPrints ID: 153443
URI: https://eprints.soton.ac.uk/id/eprint/153443
ISSN: 0013-0427
PURE UUID: 8af5ea05-7d71-4278-ac77-44d534b10209

Catalogue record

Date deposited: 20 May 2010 08:20
Last modified: 13 Dec 2018 11:02

Export record

Altmetrics

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×