Parimutuel betting under asymmetric information

Abstract : This paper examines simple parimutuel betting games under asymmetric information, with particular attention to differences between markets in which bets are submitted simultaneously versus sequentially. In the simultaneous parimutuel betting market, all (symmetric and asymmetric) Bayesian-Nash equilibria are generically characterized as a function of the number of bettors and the quality of their private information. There always exists a separating equilibrium, in which all bettors follow their private signals. This equilibrium is unique if the number of bettors is sufficiently large. In the sequential framework, earlier bets have information externalities, because they may reveal private information of bettors. They also have payoff externalities, because they affect the betting odds. One effect of these externalities is that the separating equilibrium disappears if the number of betting periods is sufficiently large.
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Journal of Mathematical Economics, Elsevier, 2008, 44 (7-8), pp.733-744. 〈10.1016/j.jmateco.2006.03.002〉
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Dernière modification le : jeudi 3 mai 2018 - 15:18:04

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Frédéric Koessler, Charles Noussair, Anthony Ziegelmeyer. Parimutuel betting under asymmetric information. Journal of Mathematical Economics, Elsevier, 2008, 44 (7-8), pp.733-744. 〈10.1016/j.jmateco.2006.03.002〉. 〈halshs-00754275〉

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