Egon Franck () (Institute for Strategy and Business Economics, University of Zurich) Erwin Verbeek () (Institute for Strategy and Business Economics, University of Zurich) Stephan Nüesch () (Institute for Strategy and Business Economics, University of Zurich)
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There is a well-established literature on separately testing the prediction power of different betting market settings. This paper provides an inter-market comparison of the forecasting accuracy between bookmakers and a major betting exchange. Employing a dataset covering all football matches played in the major leagues of the “Big Five” (England, France, Germany, Italy, Spain) during three seasons (5478 games in total), we find evidence that the betting exchange provides more accurate predictions of the same underlying event than bookmakers. A simple betting strategy of selecting bets for which bookmakers offer lower probabilities(higher odds) than the bet exchange generates above average and, in some cases, even positive returns.
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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number
0096.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Michael A. Smith & David Paton & Leighton Vaughan Williams, 2006.
"Market Efficiency in Person-to-Person Betting,"
Economica,
London School of Economics and Political Science, vol. 73(292), pages 673-689, November.
[Downloadable!] (restricted)
Justin Wolfers & Eric Zitzewitz, 2004.
"Prediction Markets,"
Journal of Economic Perspectives,
American Economic Association, vol. 18(2), pages 107-126, Spring.
[Downloadable!] (restricted)
Other versions:
Justin Wolfers & Eric Zitzewitz, 2004.
"Prediction Markets,"
NBER Working Papers
10504, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Wolfers, Justin & Zitzewitz, Eric, 2004.
"Prediction Markets,"
Research Papers
1854, Stanford University, Graduate School of Business.
[Downloadable!]