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Analytical Tools: Arbitrage, mean reversion, risk arbitrage and the favorite-longshot bias

In: Dr Z’s NFL Guidebook

Author

Listed:
  • William T. Ziemba
  • Leonard C. MacLean

Abstract

You can hedge bets as the odds change based on the current score and field position. My experience is that the sports betting market is more efficient than the financial markets, so therefore harder to beat. Of course, die hard efficient market types will like to forget that efficient markets has taken a severe beating in the 1987 and 2007-2009 stock market crashes. They simply cannot explain these events, nor the consistent high returns of some superior investors.

Suggested Citation

  • William T. Ziemba & Leonard C. MacLean, 2018. "Analytical Tools: Arbitrage, mean reversion, risk arbitrage and the favorite-longshot bias," World Scientific Book Chapters, in: Dr Z’s NFL Guidebook, chapter 6, pages 83-88, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813276505_0006
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    More about this item

    Keywords

    NFL Players ; Coaches; Strategies; Mean Reversion; Efficient Markets; Sports Enthusiasts;
    All these keywords.

    JEL classification:

    • Z23 - Other Special Topics - - Sports Economics - - - Finance
    • Z21 - Other Special Topics - - Sports Economics - - - Industry Studies
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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