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Sonic Thunder vs. Brian the Snail: Are people affected by uninformative racehorse names?

Oliver Merz, Raphael Flepp and Egon Franck ()

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2021, vol. 93, issue C

Abstract: This paper examines whether individuals’ decision making is affected by fast-sounding horse names in a betting exchange market environment. In horse racing, the name of a horse does not depend on the horse's performance and is thus uninformative. If positive affect towards fast-sounding horse names is present, we expect less accurate prices, i.e., winning probabilities, and lower returns due to the increased demand for these bets. Using over 3 million horse bets, we find evidence that the winning probabilities of bets on horses with fast-sounding names are overstated, which impairs the prediction accuracy of such bets. This finding implies that prices in betting exchange markets are distorted by incorporating affective, misleading information from a horse's fast-sounding name. Consequently, this bias translates into significantly lower betting returns for horses with names classified as fast-sounding compared to the returns for all other horses.

Keywords: Affect heuristic; Decision making; Market efficiency; Betting market; Horse racing (search for similar items in EconPapers)
JEL-codes: D40 G40 G41 L83 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:93:y:2021:i:c:s2214804321000641

DOI: 10.1016/j.socec.2021.101724

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Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) is currently edited by Pablo Brañas Garza

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