Broken odds and the favourite-longshot bias in parimutuel betting: a direct test

Broken odds and the favourite-longshot bias in parimutuel betting: a direct test

This research examines empirically the effect using broken odds - the rounded off odds reported by horse track operators - on statistical tests of market efficiency in parimutuel gambling. It finds that using rounded-off odds to test for market efficiency, instead of using the exact values, introduc...

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Veröffentlicht in:Applied economics letters 2003-04, Vol.10 (5), p.311-314
Hauptverfasser: David Walls, W., Busche, Kelly
Format: Artikel
Sprache:eng
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Applied economics
Bias
Economics
Gambling
Games
Horse-racing
Market efficiency
Model testing
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Busche, Kelly
description This research examines empirically the effect using broken odds - the rounded off odds reported by horse track operators - on statistical tests of market efficiency in parimutuel gambling. It finds that using rounded-off odds to test for market efficiency, instead of using the exact values, introduces a downward bias in the test statistics for favourite horses. Previous studies, because they relied on the rounded-off odds data, may have overstated the extent of the favourite-longshot bias in parimutuel wagering markets.
doi_str_mv 10.1080/13504850210147162
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subjects Applied economics
Bias
Economics
Gambling
Games
Horse-racing
Market efficiency
Model testing
title Broken odds and the favourite-longshot bias in parimutuel betting: a direct test
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