Author: Putintseva, Maria

Source: The Journal of Prediction Markets,  Volume 5, Number 2, September 2011 , pp. 44-74(31)

Prediction (or information) markets are markets where participants trade contracts whose payoff depends on unknown future events. Studying prediction markets allows to avoid many problems, which arise in some artificially designed behavioral experiments investigating collective decision making or individual’s belief formation. This work is aimed, first, to verify whether predictions made by prices of binary options traded in information markets are reliable and whether the prices contain additional information about the future comparing to the information available from the dynamics of underlying asset only. Second, inter- and intraday microstructure of the market of binary options on Dow Jones Industrial Average index is examined and described quantitatively. Third, since some ability to forecast future changes in the underlying asset is detected, a simple trading strategy based on observing the trading process in the prediction market is suggested and its profitability and applicability is evaluated.

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Authors: Humphreys, Brad R.; Lee, Yang Seung; Soebbing, Brian P.

Source: The Journal of Gambling Business and Economics,  Volume 5, Number 1, May 2011 , pp. 1-22(22)

Survey data on participation in gambling typically contain many zeros. The presence of many zeros presents methodological problems for the analysis of participation in gambling markets and gambling expenditure. The most common techniques for handling zeros in gambling data have been the Tobit estimator and the Heckman selectivity estimator. Recent research indicates that hurdle models (Jones 1989, 2000) and the Cragg (1971) model, are better suited to analyze participation in gambling. We apply these models to gambling participation in Canada and find that the double-hurdle model is preferred in two of the three forms of gambling examined.

Authors: Schnytzer, Adi and Shilony, Yuval

Source: The Journal of Gambling Business and Economics, Volume 1, Number 1, February 2007 , pp. 13-29(17)

The purpose of this paper is to determine empirically whether or not there is systematic price rigging in three Australian betting markets: Horse, harness and greyhound racing. We present a simple model which shows the conditions under which it is optimal for insiders to rig prices by deliberate underperformance in some races. We then show how an empirical analysis of the relationship between win and place probabilities in conjunction with observed patterns of betting behavior, may be used to establish the presence of price rigging. It is shown that there is no significant systematic price rigging in these markets.

Author: Coleman, Les

Source: The Journal of Gambling Business and Economics, Volume 1, Number 1, February 2007, pp. 31-55

This paper quantifies the extent and changes in insider trading in the Melbourne racetrack betting market using a unique, long term dataset. Wagering markets share many of the characteristics of other financial markets, and are simple, with good data and a designated endpoint. Thus they are an excellent natural laboratory to study what is probably happening in qualitatively similar conventional markets. Results of this paper provide statistically significant support for hypotheses supporting the existence and increase in level of insider trading, and suggest that around two percent of betting is by insiders.

Authors: Hurley, William; McDonough, Lawrence

Source: The Journal of Gambling Business and Economics, Volume 1, Number 1, February 2007 , pp. 3-12(10)

In the study of wagering markets, it is generally the case that the objective probabilities of various contestants (horses, teams, etc.) winning do not match those implied by the betting. More often than not favourites are underbet and longshots overbet, although some studies have found the reverse. We offer an explanation in the case where there is imperfect competition among book-makers and heterogeneous expectations among bettors.

 

Authors: Forrest, David; Alagic, Dika

Source: The Journal of Gambling Business and Economics, Volume 1, Number 1, February 2007 , pp. 57-68(12)

Lotto Extra was offered as part of the United Kingdom National Lottery’s portfolio of games between 2000 and 2006. A demand model for the game is estimated and used to illustrate a discussion of why sales of the game fell steadily to the point where it was no longer viable. Emphasis is placed on the lack of minor prizes and the long sequences of weeks when no one won the jackpot (and only) prize.

 

Authors: Liu, Shuang; Johnson, Johnnie E.V.

Source: The Journal of Gambling Business and Economics, Volume 1, Number 1, February 2007 , pp. 69-84(16)

This paper explores the extent to which decision makers in a naturalistic environment, the Hong Kong horserace betting market, anchor their probability judgments on highly visible information and make insufficient adjustments in the light of additional data. Linear regression and conditional logit models are employed to examine the extent to which certain types of information are over-represented in market odds. The results suggest that, in contrast to much of the research on anchoring conducted in laboratories, the Hong Kong betting public do not anchor their judgements on past performances of horses, jockeys or trainers.