On the timing of inside trades in a betting market

Adi Schnytzer, Yuval Shilony

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


The paper presents a game-theoretical model to examine the equilibrium timing of insider trades in a market with a finite life span. An example of such a market is that for horse betting, where insiders must bet before the race or their information is of no value. We show that there is no equilibrium in pure strategies but that there is a unique, sub game perfect equilibrium in mixed strategies. The issue arises because waiting to bet may lead to information leaks whereas betting too soon may imply paying too high a price for the bet. We derive empirical hypotheses and test them.

Original languageEnglish
Pages (from-to)176-186
Number of pages11
JournalEuropean Journal of Finance
Issue number2
StatePublished - Jun 2002


  • Applied Game Theory
  • Betting
  • Insider Trading
  • Market For Contingent Claims
  • Mixed Strategies


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