This article studies the favorite/long-shot bias and the house money effect in a simple parimutuel betting market experiment. Bettors sequentially bet on one of two alternatives in an exogenous order, and the expected return of each alternative depends on the betting shares and on the common...

In this article we examine the setting up of an eductive type of reasoning process in a negative feedback situation. We analyse a variant of a one-shot beauty contest game. Our results show a reasoning level of around 2 steps of introspection, which is enough to reach rapidly the rational...