Transactions Costs, Extent of Inefficiencies, Entries and Multiple Wagers in a Racetrack Betting Model

Donald B. Hausch and William T. Ziemba
Additional contact information
Donald B. Hausch: School of Business, University of Wisconsin, Madison, Wisconsin 53706
William T. Ziemba: Faculty of Commerce, University of British Columbia, Vancouver, British Columbia, Canada V6T 1W5

Management Science, 1985, vol. 31, issue 4, 381-394

Abstract: In a previous paper (Management Science, December 1981) Hausch, Ziemba and Rubinstein (HZR) developed a system that demonstrated the existence of a weak market inefficiency in racetrack place and show betting pools. The system appeared to make possible substantial positive profits. To make the system operational, given the limited time available for placing bets, an approximate regression scheme was developed for the Exhibition Park Racetrack in Vancouver for initial betting wealth between $2500 and $7500 and a track take of 17.1%. This paper: (1) extends this scheme to virtually any track and initial wealth level; (2) develops a modified system for multiple horse entries; (3) allows for multiple bets; (4) analyzes the effects of the track take and breakage on profits; (5) presents recent results using this system; and (6) considers the extent of the inefficiency, i.e., how much can be bet before the market becomes efficient?

Keywords: finance-portfolio; games: gambling (search for similar items in EconPapers)
Date: 1985
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.31.4.381 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:31:y:1985:i:4:p:381-394

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().