The rate of return to investment in thoroughbred racehorses is widely believed to be negative on average. In a world of fully informed market participants, this implies that ownership of a racehorse is motivated in part by nonfinancial attributes, perhaps a taste for sport. This article presents simple models of the utility derived from sporting competition. The models differ in their implications for the rate of return to racehorse ownership and its variation with the level of talent. Evidence from thoroughbred auctions and racing earnings are used to test between the models.
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