Searching for the favourite-longshot bias down under: an examination of the New Zealand pari-mutuel betting market |
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Authors: | John M Gandar Richard A Zuber R Stafford Johnson |
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Institution: | 1. Department of Economics , Chinese Culture University , 55 Hwa-Kang Road, Yang-Ming-Shan, Taipei 11116, Taiwan cwj@faculty.pccu.edu.tw |
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Abstract: | This paper tests for the presence of the favourite-longshot bias in a new setting. This bias #150 the tendency for bettors to underbet favourites and overbet longshots #150 has been found in most studies of pari-mutuel and bookmaking betting markets in the USA, the UK and Australia. However, there is growing evidence that in at least some pari-mutuel betting markets there is no favourite-longshot bias. This paper examines the previously unexplored New Zealand pari-mutuel betting market on horse races for evidence of this bias. Utilizing a large sample of recent New Zealand thoroughbred horse races, it is found that while early, off-track bettors price this bias into odds, late (on-and off-track) bettors eliminate much of the bias by the close of betting. That is, the results reinforce the view that not all pari-mutuel betting markets are characterized by a favourite-longshot bias at the close of betting. Evidence is also found that late bettors in this market are smart bettors. |
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Keywords: | carbon dioxide emissions EKC Taiwan newly industrialized economy |
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