Does transparency imply efficiency? The case of the European soccer betting market
Does transparency imply efficiency? The case of the European soccer betting market
The recent financial crisis has led regulatory authorities to initiate moves towards transparent markets. We explore whether an expectation of efficiency in such markets is justified by examining an apparently transparent, internet-based market, trading relatively simple instruments with low transaction costs - the European soccer betting market. We discover that mispricing is prevalent and differences in the degree of efficiency between countries are not accounted for by transactions cost differentials but by variations in the degree of competition, which complicates asset/bet valuation. We conclude that barriers to efficiency in the form of fundamental risk evaluation problems may remain in transparent markets and that it is important to avoid institutional features or encouraging behaviours which further complicate asset valuation.
59-61
Oikonomidis, A.
f74318f2-04d3-4548-a5aa-e791a0c2f3e2
Bruce, A.C.
6a4ed45f-ba2b-4274-8e94-bd3d3b4f8da9
Johnson, J.E.V.
6d9f1a51-38a8-4011-a792-bfc82040fac4
2015
Oikonomidis, A.
f74318f2-04d3-4548-a5aa-e791a0c2f3e2
Bruce, A.C.
6a4ed45f-ba2b-4274-8e94-bd3d3b4f8da9
Johnson, J.E.V.
6d9f1a51-38a8-4011-a792-bfc82040fac4
Oikonomidis, A., Bruce, A.C. and Johnson, J.E.V.
(2015)
Does transparency imply efficiency? The case of the European soccer betting market.
Economics Letters, 128, .
Abstract
The recent financial crisis has led regulatory authorities to initiate moves towards transparent markets. We explore whether an expectation of efficiency in such markets is justified by examining an apparently transparent, internet-based market, trading relatively simple instruments with low transaction costs - the European soccer betting market. We discover that mispricing is prevalent and differences in the degree of efficiency between countries are not accounted for by transactions cost differentials but by variations in the degree of competition, which complicates asset/bet valuation. We conclude that barriers to efficiency in the form of fundamental risk evaluation problems may remain in transparent markets and that it is important to avoid institutional features or encouraging behaviours which further complicate asset valuation.
Text
football efficiency full 060115.pdf
- Accepted Manuscript
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Accepted/In Press date: 13 January 2015
Published date: 2015
Organisations:
Centre of Excellence in Decision, Analytics & Risk Research
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Local EPrints ID: 373110
URI: http://eprints.soton.ac.uk/id/eprint/373110
ISSN: 0165-1765
PURE UUID: 5c7328f5-1dbb-47ca-b49b-8dd97a47e82b
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Date deposited: 07 Jan 2015 15:08
Last modified: 14 Mar 2024 18:48
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Contributors
Author:
A. Oikonomidis
Author:
A.C. Bruce
Author:
J.E.V. Johnson
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