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MARKET ENFORCED INFORMATION ASYMMETRY: A STUDY OF CLAIMING RACES
Author(s) -
HALL CHRISTOPHER D.
Publication year - 1986
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1986.tb01810.x
Subject(s) - odds , information asymmetry , race (biology) , economics , adverse selection , horse racing , information market , actuarial science , financial economics , positive economics , public economics , econometrics , microeconomics , computer science , sociology , logistic regression , economy , gender studies , machine learning
This is a study of complementary markets. The race track polices the betting market with information revealed in a ‘claiming horse’ market. This policing reduces the adverse consequences of asymmetric information: experts in identifying horses and fraud are deterred from biasing betting odds against bettors at large. Consequently, bettors specialize in evaluating published race information. This ‘monitoring’ theory is compared to a competing theory of claim races as a self‐assessed horse market. Parametric data is used to evaluate each theory. Institutional details also provide a test of each theory.