If Betfair is an exchange, then how do they come up with the prices on offer when nothing is exchanged?

An example today was a Harness race. There was $17k plus in the pool and up until a few seconds before the start when I captured the Betfair data, only 4 of the 8 horses had any money exchanged. Of those 4, 3 filled the first 3 placings.

In other words are all the prices we see simply contrived by an algorithm and don't relate to money wagered at all? This happens all the time with the Dogs, where the favourite is smashed and everyone hops on board and drives the price down. Many selections would only get a pittance or nothing wagered on them, making there implied volume as a % of total odds, look like 2,000:1. However, you're only offered 80:1.

My research backs this up as I'm doubly wary about laying any dog/ horse, apart from the favourite, in a lightly traded race. If you want to Back longshots, that's the sweet spot region. The odds you see, mean nothing IMHO, about a selection's chances and all contrived by an algorithm trying to be competitive against bookmaker opposition.

That Pinjarra race I quoted in the 'Good one boys' thread had an odds on fave didn't it?

Conspiracy theory, over & out!