Against All Odds? National Sentiment and Wagering on European Football
AbstractThis paper studies how national sentiment in the form of either a perception or a loyalty bias of bettors may affect pricing patterns on national wagering markets for international sport events. We show theoretically that both biases can be profitably exploited by bookmakers by way of price adjustment (odds shading). The former bias induces bookmakers to shade odds against the domestic team, the latter to adjust them in a way that depends on the demand elasticity of bettors for their national favorite. Analyzing empirically a unique data set of betting quotas from online bookmakers in twelve European countries for qualification games to the UEFA Euro 2008, we find evidence for systematic biases in the pricing of own national teams in the odds for win offered across countries. Variations in the sign and magnitude of these deviations can be explained by differences across countries in the respective strengths of the perception and loyalty biases among domestic bettors.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2008-032.
Length: 18 pages
Date of creation: Apr 2008
Date of revision:
Football; Home Bias; Investment; Patriotism;
Other versions of this item:
- Sebastian Braun & Michael Kvasnicka, 2008. "Against All Odds? â€“ National Sentiment and Wagering on European Football," Ruhr Economic Papers, Rheinisch-WestfÃ¤lisches Institut fÃ¼r Wirtschaftsforschung, Ruhr-UniversitÃ¤t Bochum, UniversitÃ¤t Dortmund, UniversitÃ¤t Duisburg-Essen 0042, Rheinisch-WestfÃ¤lisches Institut fÃ¼r Wirtschaftsforschung, Ruhr-UniversitÃ¤t Bochum, UniversitÃ¤t Dortmund, UniversitÃ¤t Duisburg-Essen.
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
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- David Forrest & Robert Simmons, 2008. "Sentiment in the betting market on Spanish football," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 40(1), pages 119-126.
- Steven D. Levitt, 2004. "Why are gambling markets organised so differently from financial markets?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(495), pages 223-246, 04.
- Tim Kuypers, 2000. "Information and efficiency: an empirical study of a fixed odds betting market," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 32(11), pages 1353-1363.
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- Igan, Deniz & Pinheiro, Marcelo & Smith, John, 2011. ""White men can't jump," but would you bet on it?," MPRA Paper 31469, University Library of Munich, Germany.
- Igan, Deniz & Pinheiro, Marcelo & Smith, John, 2012. "Racial biases and market outcomes: "White men can't jump," but would you bet on it?," MPRA Paper 36069, University Library of Munich, Germany.
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