Introduction to the Efficiency of Win Markets and the Favorite-Longshot Bias

Donald B. Hausch, Victor S. Y. Lo and William T. Ziemba
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Donald B. Hausch: University of Wisconsin-Madison, USA
Victor S. Y. Lo: University of British Columbia, Canada
William T. Ziemba: University of British Columbia, Canada

Chapter 25 in Efficiency of Racetrack Betting Markets, 2008, pp 251-253 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractEconomists have long shown interest in racetrack betting as a source for investigating attitudes to risk and the efficiency of markets. Thaler and Ziemba (1988)1, surveying research in both racing and lotteries, point that racetrack betting is an interesting application of efficient markets and rational expectations hypotheses since it possesses the usual characteristics of financial markets; namely, large numbers of investors/bettors with access to rich information sets. An advantage for testing financial theories that the racetrack has over most financial markets, though, is that there is a well-defined termination point at which final payoffs are determined…

Keywords: Racetrack Efficiency; Racetrack Betting Market; Racetrack Betting; Win Market; Finance (search for similar items in EconPapers)
Date: 2008
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