Does speculative trade reduce mispricing - and help create efficient markets - or drive prices further from fundamentals? We analyse betting exchange trading, on 9,562 U.K. horse races in 2013 and 2014, to find out. Crucially, as each race is run, the fundamental value of bets is unambiguously...

Recent evidence suggests that the fastest algorithmic traders in financial markets profit at the expense of slower traders. One solution gaining traction is a `speed-bump', which introduces a delay between the time in which an order is submitted, and when it is processed. We conduct an impact...

Asset prices tend to cluster at round numbers. We examine betting exchange data on U.K. horse races to establish whether limited cognition is partially responsible for this clustering. The key tool in this study is the stark increase in cognitive load faced by traders during races compared to...

Women are under-represented in many top jobs. We investigate whether biased beliefs about female ability – a form of ‘mistake-based discrimination’ – are partially responsible for this under-representation. We use more than 10 years of data on the performance of female jockeys in U.K....

I use U.K. betting exchange data on Wimbledon tennis matches to investigate the Grossman and Stiglitz (1980) paradox. Risk-free arbitrage opportunities arise frequently during matches (as information arrives and asynchronously shifts prices), but seldom arise before matches (when there is little...

Contests are ubiquitous in economic and political settings. Contest designers often use tools to make a contest among asymmetric contestants more even, in order to either elicit higher effort levels, or for ethical reasons. Handicapping - in which stronger participants are a priori weakened - is...

Betting exchanges allow punters to bet on a horse to lose a race. This, many argue, has opened up the sport to a new form of corruption, where races will be deliberately lost in order to profit from betting. We examine whether anecdotal evidence of the fixing of horses to lose - of which there...

An open question in market microstructure is whether ‘informed’ traders have an advantage due to access to private, inside, information; or due to a superior ability to process public information. In this article we attempt to answer this question with data from a sports betting exchange...

In this note, I derive a probability measure for betting prices on an exchange reaching a target level prior to the market closing. This allows a bettor to take a long (short) position on a bet, and calculate the probability that the short (long) price will yield a profit before the market...