Information Aggregation and Beliefs in Experimental Parimutuel Betting Markets
Frédéric Koessler
- Fonction : Auteur
- PersonId : 740979
- IdHAL : frederickoessler
- ORCID : 0000-0001-7707-4217
- IdRef : 059897775
Résumé
This paper studies the impact of belief elicitation on informational efficiency and individual behavior in experimental parimutuel betting markets. In one treatment, groups of eight participants, who possess a private signal about the eventual outcome, play a sequential betting game. The second treatment is identical, except that bettors are observed by eight other participants who submit incentivized beliefs about the winning probabilities of each outcome. In the third treatment, the same individuals make bets and assess the winning probabilities of the outcomes. Market probabilities more accurately reflect objective probabilities in the third than in the other two treatments. Submitting beliefs reduces the favorite-longshot bias and making bets improves the accuracy of elicited beliefs. A level-k framework provides some insights about why belief elicitation improves the capacity of betting markets to aggregate information.
Domaines
Economies et financesFormat du dépôt | Notice |
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Type de dépôt | Article dans une revue |
Titre |
en
Information Aggregation and Beliefs in Experimental Parimutuel Betting Markets
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Résumé |
en
This paper studies the impact of belief elicitation on informational efficiency and individual behavior in experimental parimutuel betting markets. In one treatment, groups of eight participants, who possess a private signal about the eventual outcome, play a sequential betting game. The second treatment is identical, except that bettors are observed by eight other participants who submit incentivized beliefs about the winning probabilities of each outcome. In the third treatment, the same individuals make bets and assess the winning probabilities of the outcomes. Market probabilities more accurately reflect objective probabilities in the third than in the other two treatments. Submitting beliefs reduces the favorite-longshot bias and making bets improves the accuracy of elicited beliefs. A level-k framework provides some insights about why belief elicitation improves the capacity of betting markets to aggregate information.
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Auteur(s) |
Frédéric Koessler
1, 2
, Charles Noussair
3
, Anthony Ziegelmeyer
4
1
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
2
PSE -
Paris-Jourdan Sciences Economiques
( 139754 )
- 48 boulevard Jourdan 75014 Paris
- France
3
Department of Economics
( 30385 )
- Economics department Tilburg University Warandelaan 2 P.O. Box 90153 5000 LE Tilburg The Netherlands
- Pays-Bas
4
Queen's University Management School
( 218439 )
- Irlande
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Page/Identifiant |
195-208
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Numéro |
2
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Comité de lecture |
Oui
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Vulgarisation |
Non
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Langue du document |
Anglais
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Nom de la revue |
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Audience |
Non spécifiée
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Date de publication |
2012-07
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Volume |
83
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Public visé |
Scientifique
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Sous-type de document pour les Articles |
Research article
|
Version du document |
version éditeur
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Voir aussi |
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Domaine(s) |
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Mots-clés (JEL) |
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Financement |
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Indexation contrôlée |
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Mots-clés |
en
Parimutuel betting, Information aggregation, Favorite-longshot bias, Elicited beliefs, Level-k reasoning, Experiment
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DOI | 10.1016/j.jebo.2012.02.017 |
ProdINRA | 316590 |
UT key WOS | 000307134500003 |
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