Surprised by the Parimutuel Odds?

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Surprised by the Parimutuel Odds? / Ottaviani, Marco; Sørensen, Peter Norman.

In: American Economic Review (Print Edition), Vol. 99, No. 5, 12.2009, p. 2129-2134.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Ottaviani, M & Sørensen, PN 2009, 'Surprised by the Parimutuel Odds?', American Economic Review (Print Edition), vol. 99, no. 5, pp. 2129-2134. https://doi.org/10.1257/aer.99.5.2129

APA

Ottaviani, M., & Sørensen, P. N. (2009). Surprised by the Parimutuel Odds? American Economic Review (Print Edition), 99(5), 2129-2134. https://doi.org/10.1257/aer.99.5.2129

Vancouver

Ottaviani M, Sørensen PN. Surprised by the Parimutuel Odds? American Economic Review (Print Edition). 2009 Dec;99(5):2129-2134. https://doi.org/10.1257/aer.99.5.2129

Author

Ottaviani, Marco ; Sørensen, Peter Norman. / Surprised by the Parimutuel Odds?. In: American Economic Review (Print Edition). 2009 ; Vol. 99, No. 5. pp. 2129-2134.

Bibtex

@article{5860a85004dc11df825d000ea68e967b,
title = "Surprised by the Parimutuel Odds?",
abstract = "Empirical analyses of parimutuel betting markets have documented that market probabilities of favorites (longshots) tend to underestimate (overestimate) the corresponding empirical probabilities. We argue that this favorite-longshot bias is consistent with bettors taking simultaneous positions on the basis of private information about the likelihood of different outcomes. The ex post realization of a high market probability indicates favorable information about the occurrence of an outcome -- and the opposite is true for longshots. This explanation for the bias relies on the bettors' inability to incorporate the surprise revealed by the final odds.",
author = "Marco Ottaviani and S{\o}rensen, {Peter Norman}",
note = "JEL classification: D81, D82, L83",
year = "2009",
month = dec,
doi = "10.1257/aer.99.5.2129",
language = "English",
volume = "99",
pages = "2129--2134",
journal = "American Economic Review",
issn = "0002-8282",
publisher = "American Economic Association",
number = "5",

}

RIS

TY - JOUR

T1 - Surprised by the Parimutuel Odds?

AU - Ottaviani, Marco

AU - Sørensen, Peter Norman

N1 - JEL classification: D81, D82, L83

PY - 2009/12

Y1 - 2009/12

N2 - Empirical analyses of parimutuel betting markets have documented that market probabilities of favorites (longshots) tend to underestimate (overestimate) the corresponding empirical probabilities. We argue that this favorite-longshot bias is consistent with bettors taking simultaneous positions on the basis of private information about the likelihood of different outcomes. The ex post realization of a high market probability indicates favorable information about the occurrence of an outcome -- and the opposite is true for longshots. This explanation for the bias relies on the bettors' inability to incorporate the surprise revealed by the final odds.

AB - Empirical analyses of parimutuel betting markets have documented that market probabilities of favorites (longshots) tend to underestimate (overestimate) the corresponding empirical probabilities. We argue that this favorite-longshot bias is consistent with bettors taking simultaneous positions on the basis of private information about the likelihood of different outcomes. The ex post realization of a high market probability indicates favorable information about the occurrence of an outcome -- and the opposite is true for longshots. This explanation for the bias relies on the bettors' inability to incorporate the surprise revealed by the final odds.

U2 - 10.1257/aer.99.5.2129

DO - 10.1257/aer.99.5.2129

M3 - Journal article

VL - 99

SP - 2129

EP - 2134

JO - American Economic Review

JF - American Economic Review

SN - 0002-8282

IS - 5

ER -

ID: 17083580