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Some Evidence of the Efficiency of a Speculative Market

Mukhtar M. Ali
Econometrica
Vol. 47, No. 2 (Mar., 1979), pp. 387-392
Published by: The Econometric Society
DOI: 10.2307/1914189
Stable URL: http://www.jstor.org/stable/1914189
Page Count: 6
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Some Evidence of the Efficiency of a Speculative Market
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Abstract

It is well known that the returns on various betting opportunities at a racetrack are determined by a competitive bidding of the bettors in a natural environment of their decision making. In this paper, two simple bets of unknown but identical winning probabilities are identified. An analysis of 1,089 observations shows that the data are consistent with the hypothesis that both bets are identically priced, an implication of an efficient speculative market.

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