Information aggregation and belief elicitation in experimental parimutuel betting markets

Frédéric Koessler, Charles Noussair, Anthony Ziegelmeyer

Research output: Contribution to journalArticlepeer-review

12 Scopus citations


This paper studies the impact of belief elicitation on informational efficiency and individual behavior in experimental parimutuel betting markets. In one treatment, groups of eight participants, who possess a private signal about the eventual outcome, play a sequential betting game. The second treatment is identical, except that bettors are observed by eight other participants who submit incentivized beliefs about the winning probabilities of each outcome. In the third treatment, the same individuals make bets and assess the winning probabilities of the outcomes. Market probabilities more accurately reflect objective probabilities in the third than in the other two treatments. Submitting beliefs reduces the favorite-longshot bias and making bets improves the accuracy of elicited beliefs. A level- k framework provides some insights about why belief elicitation improves the capacity of betting markets to aggregate information.

Original languageEnglish (US)
Pages (from-to)195-208
Number of pages14
JournalJournal of Economic Behavior and Organization
Issue number2
StatePublished - Jul 2012
Externally publishedYes


  • Elicited beliefs
  • Experiment
  • Favorite-longshot bias
  • Information aggregation
  • Level-k reasoning
  • Parimutuel betting

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management


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