Sonic Thunder vs Brian the Snail – Are people affected by uninformative racehorse names?

36 Pages Posted: 23 Oct 2019 Last revised: 3 Nov 2020

See all articles by Oliver Merz

Oliver Merz

University of Zurich - Department of Business Administration (IBW)

Raphael Flepp

University of Zurich - Department of Business Administration (IBW)

Egon P. Franck

University of Zurich - Department of Business Administration (IBW)

Date Written: October 14, 2019

Abstract

This paper examines whether individuals’ decision making is affected by fast-sounding horse names in a betting exchange market environment. In horse racing, the name of a horse does not depend on the horse’s performance and is thus uninformative. If positive affect towards fast-sounding horse names is present, we expect less accurate prices (winning probabilities) and lower returns due to the increased demand for these bets. Using over 3 million horse bets, we find evidence that the winning probabilities of bets on horses with fast-sounding names are overstated, which impairs the prediction accuracy of such bets. This finding implies that prices in betting exchange markets are not efficient, as they become distorted by incorporating affective, misleading information from a horse’s fast-sounding name. This bias translates into significantly lower betting returns for horses classified as fast-sounding compared to the returns for all other horses.

Keywords: Affect heuristic, Decision making, Market efficiency, Betting industry, Horse Racing

JEL Classification: D40, G40, G41, L83

Suggested Citation

Merz, Oliver and Flepp, Raphael and Franck, Egon P., Sonic Thunder vs Brian the Snail – Are people affected by uninformative racehorse names? (October 14, 2019). Available at SSRN: https://ssrn.com/abstract=3469641 or http://dx.doi.org/10.2139/ssrn.3469641

Oliver Merz (Contact Author)

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

Raphael Flepp

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

Egon P. Franck

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich 8032
Switzerland
+41 1 634 28 45 (Phone)

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