Pricing in response to new information: The case of betting markets.
Markets are information aggregators. But how do they incorporate new data into their pricing? We examine the response of prediction markets to a novel information shock in a quasi‐natural experiment: How did the absence announcements of elite soccer players influence the betting odds of affected mat...
| Publicado en: | Economic Inquiry Vol. 63; no. 1; pp. 236 - 265 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Jan2025
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=181889675&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 181889675 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Jan2025 vid: 63 iid: 1 pid: 480 pub: Wiley-Blackwell artinfo: ui: 181889675 10.1111/ecin.13258 ppf: 236 ppct: 29 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 3.3MB tig: atl: Pricing in response to new information: The case of betting markets. aug: au: Fischer, Kai Schmal, W. Benedikt affil: Düsseldorf Institute for Competition Economics (DICE) at Heinrich Heine University Düsseldorf, Düsseldorf, Germany Economic Theory Group, Ilmenau University of Technology, Ilmenau, Germany Department for Management, Strategy, and Innovation (MSI), KU Leuven, Leuven, Belgium su: Prices Prediction markets Elite athletes Market pricing Market prices sug: subj: Prices Prediction markets Elite athletes Market pricing Market prices keyword: belief updating betting markets betting odds forecasting errors information shocks prediction markets pricing belief updating betting markets betting odds forecasting errors information shocks prediction markets pricing ab: Markets are information aggregators. But how do they incorporate new data into their pricing? We examine the response of prediction markets to a novel information shock in a quasi‐natural experiment: How did the absence announcements of elite soccer players influence the betting odds of affected matches? Analyzing the first four statistical moments of 117,174 odds from 32 bookmakers, we identify initial inertia followed by a lagged reaction that we cannot reason with learning. Our findings raise questions about how bettors and bookmakers incorporate new information into their beliefs. It has broader implications regarding information processing in markets. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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