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Testing for Home Team and Favorite Biases in the Australian Rules Football Fixed Odds and Point Spread Betting Markets

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Author Info

  • Adi Schnytzer

    ()
    (Bar-Ilan University)

  • Guy Weinberg

    (Bar-Ilan University)

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    Abstract

    In this paper, we test two different kinds of bias; the favorite-longshot/favorite-underdog and the home team bias, and distinguish between the two, using a distinctive feature of the Australian Football League (AFL), that many games are played on neutral grounds. This is the first empirical study, to the best of our knowledge, to make a clear distinction between the two types of bias. We conduct our tests by subjecting 2001-2004 data for the AFL to detailed scrutiny, using standard econometric weak-form efficiency models of point spread and fixed odds betting markets. Where the results suggest the presence of a bias, we test potential profitability via betting simulation. We are able to reject the existence of any significant pure favorite-longshot/favorite-underdog bias in either market, and to demonstrate the existence of a significant bias in favor of teams with an apparent home ground advantage in games played outside Victoria in the point spread market and in the fixed odds market during 2002, 2004 and the period as a whole. Games in Melbourne and in Geelong are free of such a bias (except for 2003 in the point spread market in Geelong). Betting simulations which attempt to exploit these inefficiencies yield modest profits.

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    File URL: http://www.biu.ac.il/soc/ec/wp/2011-13.pdf
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    Bibliographic Info

    Paper provided by Department of Economics, Bar-Ilan University in its series Working Papers with number 2011-13.

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    Date of creation: Mar 2011
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    Handle: RePEc:biu:wpaper:2011-13

    Contact details of provider:
    Postal: Faculty of Social Sciences, Bar Ilan University 52900 Ramat-Gan
    Phone: Phone: +972-3-5318345
    Fax: +972-3-7384034
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    Web page: http://econ.biu.ac.il
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    Keywords: market efficiency; betting markets; sports economics; Australian Rules football;

    This paper has been announced in the following NEP Reports:

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    1. Avichai Snir & Daniel Levy, 2011. "Shrinking Goods and Sticky Prices: Theory and Evidence," Emory Economics 1104, Department of Economics, Emory University (Atlanta).
    2. Daniel Levy & Hainpeng (Allan) Chen & Sourav RayAuthor-Name: Mark Bergen, 2004. "Asymmetric Price Adjustment in the Small: An Implication of Rational Inattention," Emory Economics 0408, Department of Economics, Emory University (Atlanta).
    3. Matthew Higgins & Daniel Levy & Andrew T. Young, 2003. "Growth and Convergence across the US: Evidence from County-Level Data," Working Papers 2003-03, Department of Economics, Bar-Ilan University.
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    7. Bar-El, Ronen & García Muñoz, Teresa & Neuman, Shoshana & Tobol, Yossi, 2010. "The Evolution of Secularization: Cultural Transmission, Religion and Fertility Theory, Simulations and Evidence," IZA Discussion Papers 4980, Institute for the Study of Labor (IZA).
    8. Sourav Ray & Haipeng (Allan) Chen & Mark Bergen & Daniel Levy, 2005. "Asymmetric Wholesale Pricing: Theory and Evidence," Emory Economics 0513, Department of Economics, Emory University (Atlanta).
    9. Leonid V. Azarnert, 2008. "Involuntary Integration in Public Education, Fertility and Human Capital," Working Papers 2008-07, Department of Economics, Bar-Ilan University.
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