Noise, Information, and the Favorite-Longshot Bias in Parimutuel Predictions
Abstract
A new model of parimutuel betting with private information provides a simple explanation for the favorite-longshot bias in terms of the amount of information relative to noise present in the market.
Suggested Citation
Marco Ottaviani and Peter Norman Sørensen. "Noise, Information, and the Favorite-Longshot Bias in Parimutuel Predictions" American Economic Journal: Microeconomics (2008).
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