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Efficiency and Profitability in Exotic Bets
Peter Asch and Richard E. Quandt
New Series, Vol. 54, No. 215 (Aug., 1987), pp. 289-298
Published by: Wiley on behalf of The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines
Stable URL: http://www.jstor.org/stable/2554443
Page Count: 10
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The efficiency and profitability of exotic racetrack bets such as exactas and daily doubles are examined. Efficiency is understood to mean that above average returns cannot be made in the long run once risk is appropriately controlled for. The markets in question are found not to be efficient; the inefficiencies, however, are insufficient to permit simple strategies to show a consistent profit. Some evidence of "smart money" exists in that holders of inside information may bet on exactas rather than equivalent standard bets in order to avoid signalling their actions to the betting public.
Economica © 1987 London School of Economics