ABSTRACT
This chapter conducts an ex post productivity evaluation of 1,681 thoroughbred foals sold between 2007 and 2008 in Great British and Irish public auctions who have now concluded their racing career. These auctions offer a unique natural context to study competitive bidding behaviour as each asset’s on-track yield can be measured. The results provide evidence to support a commonly held belief – a high percentage of thoroughbreds incur net negative returns. The scale of losses is amplified as winning auction bids increase. Alternative behavioural arguments to explain the inefficiencies are given consideration, yet these do little to explicate the losses. While the results could be consistent with a winner’s curse hypothesis, it is important to consider owner motivations. The results have implications specific to the industry and can also inform a wider debate relating to the motivations of owners in sport.
