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Can Asset Markets Be Manipulated? A Field Experiment With Racetrack Betting

Camerer, Colin F. (1998) Can Asset Markets Be Manipulated? A Field Experiment With Racetrack Betting. Journal of Political Economy, 106 (3). pp. 457-482. ISSN 0022-3808. http://resolver.caltech.edu/CaltechAUTHORS:20090918-113839028

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Abstract

To test whether naturally occurring markets can be strategically manipulated, $500 and $1,000 bets were made, then canceled, at horse racing tracks. The net effects of these costless temporary bets give clues about how market participants react to information large bets might contain. The bets moved odds on horses visibly (compared to matched‐pair control horses with similar prebet odds) and had a slight tendency to draw money toward the horse that was temporarily bet, but the net effect was close to zero and statistically insignificant. The results suggest that some bettors inferred information from bets and others did not, and their reactions roughly canceled out.


Item Type:Article
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http://dx.doi.org/10.1086/250018DOIUNSPECIFIED
http://www.journals.uchicago.edu/doi/abs/10.1086/250018PublisherUNSPECIFIED
Additional Information:© 1998 by The University of Chicago. Research assistance was provided by Jessica San-San Tien, Dov and Amanda Rosenberg, Hongjai Rhee, Angela Hung, and Chris Anderson. Excellent secretarial work was done by Gail Nash. Helpful comments were received from participants at the MacArthur Foundation Preferences Group, the Russell Sage Foundation Behavioral Economics Summer Camp (Berkeley, July 1996), the Harvard Behavioral Economics Workshop, the Economic Science Association (September 1997), Peter Bossaerts, Tim Cason, editor Lars Hansen, Teck Ho, Hongjai Rhee, Charles Plott, Simon Wilkie, and an anonymous referee. Early preparation was provided by Rich Palmer and Burt Camerer (who taught me to ask "why is that?").
Record Number:CaltechAUTHORS:20090918-113839028
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ID Code:15969
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Deposited By: George Porter
Deposited On:05 Oct 2009 16:35
Last Modified:26 Dec 2012 11:24

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