scholarly journals MEASURING THE EXTENT OF INSIDE TRADING IN HORSE BETTING MARKETS

2013 ◽  
Vol 4 (2) ◽  
pp. 21-41
Author(s):  
Adi Schnytzer ◽  
Martien Lamers ◽  
Vasiliki Makropoulou
Keyword(s):  
Insider Trading ◽  
Private Information ◽  
Inside Trading ◽  
Price Setting ◽  
Optimal Price ◽  
Potential Value ◽  
New Information ◽  
Betting Market ◽  
Betting Markets ◽  
Football Betting

This paper develops a theoretical framework for and models optimal price setting by on-course bookmakers in the racetrack betting market. This framework suggests that opening prices should include a premium that compensates bookmakers for the risk that insiders will account for private information and exploit any mis-pricing made by the bookmakers. The model is an extension of the model developed by Makropoulou and Markellos (2007) for football betting to the racetrack betting market. Using an extensive dataset and performing Monte Carlo simulations to calculate the potential value of new information, we measure insider trading in the Australian racetrack betting market.

THE RELATIVE IMPORTANCE OF STRENGTH AND WEIGHT IN PROCESSING NEW INFORMATION IN THE COLLEGE FOOTBALL BETTING MARKET

2012 ◽  
Vol 2 (2) ◽  
pp. 13-28
Author(s):  
Greg Durham ◽  
Mukunthan Santhanakrishnan
Keyword(s):  
San Antonio ◽  
College Football ◽  
Price Formation ◽  
Relative Importance ◽  
State University ◽  
Montana State University ◽  
New Information ◽  
Betting Market ◽  
Football Betting ◽  
Insight Into

Griffin and Tversky (1992) suggest that individuals, when formulating posterior probabilities based on the available evidence, tend to overreact to a new piece of evidence’s strength while underreacting to the relative importance of its weight.  We test this prediction using the college football betting market, a market that is commonly employed in tests for efficiency and rationality.  Using average points in excess of the spread and streak against the spread as measures for strength and weight, respectively, we find that bettors overreact to strength and underreact to weight.  These results are consistent with the predictions of Griffin and Tversky, as well as with the findings of Sorescu and Subrahmanyam (2006) and Barberis, Shleifer, and Vishny (1998) in financial market settings.  Our work also provides insight into how behavioral biases might affect price-formation processes in other markets.The authors thank Tod Perry, Omar Shehryar, and Kumar Venkataraman for their careful feedback and thoughtful suggestions.  The authors are also grateful for comments from seminar participants at the 2008 Midwest Finance Association meetings in San Antonio and 2008 Southwestern Finance Association meetings in Houston, as well as from seminar participants at Montana State University.  (The authors are responsible for any outstanding errors in this paper.)

Insider Trading in Betting Markets

2013 ◽  
pp. 297-315
Author(s):  
Adi Schnytzer
Keyword(s):  
Insider Trading ◽  
Betting Market ◽  
Betting Markets ◽  
The Impact

The focus of this chapter is the racing betting market, notably the gallops, harness, and greyhounds. A key issue is whether the presence of betting insiders at the track implies that their presence is easily measured. It is shown that this is a function of the microstructure of the particular betting market. In some markets, the impact of insider trading is readily measured, while in others, it has hitherto proven virtually impossible. The different microstructures of betting markets and the implications for insider trading and its measurement are considered.

Analysts' Information Acquisition and Stock Price Synchronicity: A Regulatory Perspective from China

2018 ◽  
Vol 33 (1) ◽  
pp. 153-179 ◽  
Author(s):  
Haiyan Jiang ◽  
Donghua Zhou ◽  
Joseph H. Zhang
Keyword(s):  
Insider Trading ◽  
Private Information ◽  
Stock Prices ◽  
Information Acquisition ◽  
Stock Price ◽  
Specific Information ◽  
Stock Price Synchronicity ◽  
Playing Field ◽  
Information Advantage ◽  
Private Information Acquisition

SYNOPSIS Against the backdrop of the Chinese Directive 40 (China's Reg FD) issued in 2007 as an attempt to curb insider trading and to level the information playing field, this study investigates whether analysts' private information acquisition influences the extent to which firm-specific information is impounded into stock prices, i.e., stock price synchronicity, and how the restrictions on selective disclosures imposed by Directive 40 have shaped the relationship between analyst information acquisition and synchronicity. Using a pre-Directive 40 sample, we show that synchronicity is negatively related to analysts' private information acquisition, which provides support for the “information advantage” argument of analysts' information production. However, the ability of analysts' private information acquisition in improving firm-specific information incorporated into stock price is mitigated post-Directive 40 due to a restriction on selective disclosures and/or private communication. Moreover, we find that this regulatory impact varies for firms being followed by affiliated analysts versus non-affiliated analysts. JEL Classifications: G14; G15; G17; G18.

scholarly journals Just How Serious is Insider Trading? An evaluation using thoroughbred wagering markets

2013 ◽  
Vol 2 (3) ◽  
pp. 85-100
Author(s):  
Les Coleman
Keyword(s):  
Financial Markets ◽  
Insider Trading ◽  
Good Data ◽  
Betting Market ◽  
The University ◽  
Significant Support ◽  
Natural Laboratory

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.Research for this paper was supported by a grant from the Economics and Commerce faculty at the University of Melbourne, and was conducted very efficiently by Andrew Saunderson. Dr Ian O’Connor provided excellent assistance with analysis of data. I am grateful for valuable comments from the Journal’s editor and an anonymous reviewer, and from delegates to the 2004 Australasian Finance and Banking Conference where an early version of this paper was presented. All remaining errors and omissions are mine.

Optimal price setting and inflation inertia in a rational expectations model

2008 ◽  
Vol 32 (8) ◽  
pp. 2584-2621 ◽  
Author(s):  
Michael Juillard ◽  
Ondra Kamenik ◽  
Michael Kumhof ◽  
Douglas Laxton
Keyword(s):  
Rational Expectations ◽  
Price Setting ◽  
Optimal Price ◽  
Inflation Inertia

scholarly journals A Bilevel Approach for Optimal Price-Setting of Time-and-Level-of-Use Tariffs

2020 ◽  
Vol 11 (6) ◽  
pp. 5462-5465
Author(s):  
Mathieu Besancon ◽  
Miguel F. Anjos ◽  
Luce Brotcorne ◽  
Juan A. Gomez-Herrera
Keyword(s):  
Price Setting ◽  
Optimal Price ◽  
Level Of Use

Why Do IPO Offer Prices Only Partially Adjust?

2014 ◽  
Vol 04 (03) ◽  
pp. 1450009 ◽  
Author(s):  
Özgür Ş. İnce
Keyword(s):  
Initial Public Offering ◽  
Private Information ◽  
Information Acquisition ◽  
Structural Model ◽  
Public Information ◽  
Public And Private ◽  
New Information ◽  
Pricing Process ◽  
Ipo Pricing ◽  
Public Offering

This study develops a structural model of the initial public offering (IPO) pricing process that enables the estimation of adjustment rates for public and private pricing information gathered during bookbuilding. The estimated upward adjustment rate of public information is only 21%, significantly less than the 28% rate of private information. Adjustment rates decline towards the IPO date, especially for upward adjustments. The findings contradict information acquisition theories that predict a complete adjustment to public information and highlight the inefficiency of the IPO bookbuilding mechanism in handling new information even when information is publicly available and especially when it is favorable.

scholarly journals Optimal price-setting in pay for performance schemes in health care

2016 ◽  
Vol 123 ◽  
pp. 57-77 ◽  
Author(s):  
Søren Rud Kristensen ◽  
Luigi Siciliani ◽  
Matt Sutton
Keyword(s):  
Health Care ◽  
Pay For Performance ◽  
Price Setting ◽  
Optimal Price
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