Can Asset Markets Be Manipulated? A Field Experiment With Racetrack Betting

To test whether naturally occurring markets can be strategically manipulated, $500 and $1,000 bets were made, then canceled, at horse racing tracks. The net effects of these costless temporary bets give clues about how market participants react to information large bets might contain. The bets moved odds on horses visibly (compared to matched‐pair control horses with similar prebet odds) and had a slight tendency to draw money toward the horse that was temporarily bet, but the net effect was close to zero and statistically insignificant. the results suggest that some bettors inferred information from bets and others did not, and their reactions roughly canceled out.