The Dosage Breeding Theory for Horse Racing Predictions

Marshall Gramm and William T. Ziemba
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Marshall Gramm: Department of Economics and Business, Rhodes College, Memphis, TN, USA
William T. Ziemba: Sauder School of Business, UBC, Vancouver, Canada and Mathematical Institute, Oxford University, UK and ICMA Centre, University of Reading, UK

Chapter 23 in Calendar Anomalies and Arbitrage, 2012, pp 523-556 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis chapter surveys the dosage breeding theory pioneered by Vuilliers, Varola, and Roman with major emphasis on two top classic three-year-old thoroughbred races, namely, the Kentucky Derby and the Belmont Stakes. Run at 1¼ mi and ½ mi respectively, they typically are at least ⅛ and ¼ mi longer than any of the horses has ever raced before. This extra distance, combined with the large fields (especially in the Derby), make these two races a difficult test of stamina for horses this young. Bettors are also challenged because there is no direct evidence of whether a horse has the stamina to compete effectively at these distances. The informational content of the publicly available, pedigree-based measure of stamina, the Dosage Index, is used with simple performance measures to identify a semi-strong-form inefficiency. Statistically significant profits, net of transaction costs, could have been achieved during 1946-2006. This can be compared to the middle leg of the Triple Crown, the Preakness, run at ${\raise0.5ex\hbox{$\scriptstyle {13}$}\kern-0.1em/\kern-0.15em\lower0.25ex\hbox{$\scriptstyle {16}$}}$, where the Dosage Index provided no advantage.

Keywords: Calendar Anomalies; Arbitrage; Stock Prices; Stock Returns; US Stock Market; Futures Markets; Betting; Trading Strategies; Sports Market; Lottery Market; Capital Growth Theory; Semi-Strong Market Efficiency; Speculative Investments; Index Futures; Factor Models Based on Fundamental Anomalies; Worldwide Stock Market Strategies (search for similar items in EconPapers)
Date: 2012
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