Favourite–longshot biases in a pari-mutuel system without cross arbitrage

Kazuki Okamoto () and Mototsugu Fukushige ()
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Kazuki Okamoto: JIM Technology Corporation

Economics Bulletin, 2022, vol. 42, issue 1, 203 - 207

Abstract: The Japan Racing Association supplies bracket quinellas and quinellas. Repdigit-type bracket quinellas and their corresponding quinellas lead to the same winning probabilities, with both types of quinellas operating separately under a pari-mutuel system. However, the actual odds for these quinellas are different. Empirical testing suggests that there is no possibility for arbitrage between these tickets and that the repdigit-type bracket quinella exhibits a stronger favorite–longshot bias than the quinella. This implies that the favorite–longshot bias is not arbitraged across the separately operated pari-mutuel system and is always stronger for bracket-type quinellas than quinellas.

Keywords: favourite–longshot bias; horse racing; quinella; bracket quinella (search for similar items in EconPapers)
JEL-codes: D1 G1 (search for similar items in EconPapers)
Date: 2022-02-20
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