The Influence of Market Ecology on Market Efficiency: Evidence From a Speculative Financial Market

Ming-Chien Sung and Johnnie Johnson
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Ming-Chien Sung: Centre for Risk Research, School of Management, University of Southampton
Johnnie Johnson: Centre for Risk Research, School of Management, University of Southampton

Journal of Gambling Business and Economics, 2007, vol. 1, issue 3, 185-198

Abstract: This paper explores differences in market ecology in a speculative financial market, the horserace betting market, and examines the impact these variations have on the information which returns seeking bettors need to incorporate in their subjective probability estimates. Conditional logit models are employed to demonstrate that different types of data influence the outcome of races distinguished by the degree to which the information environment is benign/hostile to bettors. The results suggest that the degree to which bettors use appropriate information in assessing horses' winning probabilities is influenced by market ecology and that this in turn affects the degree of efficiency in different market segments.

Keywords: MARKETS; EFFICIENCY; ECOLOGY; BETTING (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2007
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