Since the rational expectations revolution in macroeconomics, the subject has changed massively, adopting the principles behind the revolution and building on them in a spectacular way. In this accessible and informative book, the authors guide the student through what has become the conceptual...

This paper verifies the existence of the favourite-longshot bias in a variety of sports betting markets where odds are set by bookmakers, but the precise pattern of the bias is not identical. Evidence is found to support a central prediction of the Shin (1993) model, which asserts that...

We examine whether inflation targeting should be regarded as optimal. Targeting inflation implies (undesirably) that price level variance tends to infinity: we produce some evidence from both a representative agent model and a long-used forecasting model that, once an endogenous indexation...

It is shown that the individual fixed-odds betting market on UK football exhibits the same favourite-longshot bias as that found in horse-racing. The bias appears both in betting on results (home win, away win or draw) and in betting on specific scores, and there are certain trading rules which...