Efficiency of Betting Markets and Rationality of Players: Evidence from the French 6/49 Lotto

Journal of Applied Statistics, Vol. 34, No. 6, 2007

Posted: 16 Nov 2011

See all articles by Patrick Roger

Patrick Roger

Strasbourg University - LARGE Research Center - EM Strasbourg Business School

Marie-Hélène Broihanne

Strasbourg University, LaRGE Research Center, EM Strasbourg Business School

Date Written: January 15, 2007

Abstract

We analyze the existence of preferred numbers on the French Lotto market and prove that this market is not strongly efficient in the sense of Thaler & Ziemba (1988). The preference for low numbers is investigated by means of stochastic dominance tests. The specific features of the French Lotto game allow us to build a simple estimate of the probability distribution of numbers actually played. The results are compared with the (highly time-consuming) maximum likelihood estimator used by Farrell et al. (2000). It is shown that the two methods give very close results. Our conclusions stress the perspectives of this study in various domains.

Keywords: lotto, pari-mutuel, information efficiency, maximum likelihood estimation

JEL Classification: D81

Suggested Citation

Roger, Patrick and Broihanne, Marie-Hélène, Efficiency of Betting Markets and Rationality of Players: Evidence from the French 6/49 Lotto (January 15, 2007). Journal of Applied Statistics, Vol. 34, No. 6, 2007, Available at SSRN: https://ssrn.com/abstract=1959809

Patrick Roger (Contact Author)

Strasbourg University - LARGE Research Center - EM Strasbourg Business School ( email )

PEGE
61 avenue de la Forêt Noire
Strasbourg, 67000
France

Marie-Hélène Broihanne

Strasbourg University, LaRGE Research Center, EM Strasbourg Business School ( email )

PEGE
61 avenue de la Forêt Noire
Strasbourg, 67000
France

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