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The ordinal efficiency of betting markets: an exploded logit approach

[journal article]

Johnson, Johnnie; Bruce, Alistair Cameron; Yu, Jiejun

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Abstract This paper offers a new perspective on efficiency in betting markets by examining the degree to which finishing order in horseraces corresponds to probabilities inherent in odds across different categories of horserace. The application of an exploded logit procedure reveals a significantly greater degree of ordinal efficiency in higher relative to lower class races. Explanations for the phenomenon include differences in prize-related incentives, cross-market distinctions in information markets and differential opportunity/incentive for market manipulation.
Keywords information
Classification Political Economy; Economic Sectors
Free Keywords market efficiency; betting
Document language English
Publication Year 2008
Page/Pages p. 3703-3709
Journal Applied Economics, 42 (2008) 29
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)