What Causes the Favorite-Longshot Bias? Further Evidence from Tennis
AbstractIn sports betting markets, bets on favorites tend to have a higher expected value than bets on longshots. This article uses a data set of almost 45,000 professional single tennis matches to show that the favorite-longshot bias is much stronger in matches between lower-ranked players, in later-round matches, and in high-profile tournaments. These results cannot be solely explained by bettors being locally risk-loving or overestimating chances of longshots, but are consistent with bookmakers protecting themselves against both better informed insiders and the general public exploiting new information.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 47905.
Date of creation: 30 Jun 2013
Date of revision:
favorite-longshot bias; tennis; sports betting; market efficiency;
Find related papers by JEL classification:
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
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- Snowberg, Erik & Wolfers, Justin, 2010.
"Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?,"
CEPR Discussion Papers
7801, C.E.P.R. Discussion Papers.
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- Erik Snowberg & Justin Wolfers, 2010. "Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?," CESifo Working Paper Series 3029, CESifo Group Munich.
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