The Favourite-Longshot Bias, Bookmaker Margins and Insider Trading in a Variety of Betting Markets
AbstractThis 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 bookmakers are impelled to create a bias in their odds because of the presence of insider traders: that margins increase with the number of competitors. Copyright Blackwell Publishers Ltd and the Board of Trustees of the Bulletin of Economic Research, 2003.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Bulletin of Economic Research.
Volume (Year): 55 (2003)
Issue (Month): 3 (07)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0307-3378
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- Michael A. Smith & David Paton & Leighton Vaughan-Williams, 2004. "Costs, biases and betting markets: new evidence," Working Papers 2004/5, Nottingham Trent University, Nottingham Business School, Economics Division.
- Nikolaos Vlastakis & George Dotsis & Raphael N. Markellos, 2009. "How efficient is the European football betting market? Evidence from arbitrage and trading strategies," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(5), pages 426-444.
- Les Coleman, 2007. "Just How Serious is Insider Trading? An Evaluation using Thoroughbred Wagering Markets," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 1(1), pages 31-55, February.
- Lahvicka, Jiri, 2013. "What Causes the Favorite-Longshot Bias? Further Evidence from Tennis," MPRA Paper 47905, University Library of Munich, Germany.
- McAlvanah, Patrick & Moul, Charles C., 2013. "The house doesn’t always win: Evidence of anchoring among Australian bookies," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 87-99.
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