Examining agency conflict in horse racing

Brown, Alasdair (2012) Examining agency conflict in horse racing. Southern Economic Journal, 79 (2). pp. 388-398. ISSN 0038-4038

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Abstract

We study UK horse racing for signs of conflict between horse owners (principals) and trainers (agents). Trainers often prepare their own horses for races in addition to having outsiders' horses in their care. Utilizing betting market data to infer the expected performance of a horse, we find that owner–trainer horses outperform outsider–trainer horses, indicating that this principal–agent relationship is characterized by agent shirking. If the owner holds a large proportion of the horses in the trainer's stable, the shirking effect may be mitigated but not eradicated. In a separate result, we find that outsider–trainer horses are more inconsistent than their owner–trainer peers. As inconsistency is a sign of betting market manipulation, this suggests that the agent in this setting extracts a second, informational rent from the principal.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance
Depositing User:	Pure Connector
Date Deposited:	06 Jan 2014 14:00
Last Modified:	28 Mar 2025 05:36
URI:	https://ueaeprints.uea.ac.uk/id/eprint/45782
DOI:	10.4284/0038-4038-2011.198

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