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The Reverse Favourite-longshot Bias and Market Efficiency in Major League Baseball: An Update

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  • Linda M. Woodland

    (Eastern Michigan University)

  • Bill M. Woodland

    (Eastern Michigan University)

Abstract

Racetrack and sports betting markets have been researched extensively with respect to the question of market efficiency. In contrast to the consistently observed favourite-longshot bias found in racetrack betting markets, it has been shown that gamblers in the market for Major League Baseball games reveal the opposite behaviour. This paper updates the previous study with ten years of additional data for the 1990-99 seasons. The strength of the reverse favourite-longshot bias is virtually identical to the original paper. The result suggests that, contrary to most reported inefficiencies in gambling markets, this bias appears to be permanent. Copyright Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research 2003.

Suggested Citation

  • Linda M. Woodland & Bill M. Woodland, 2003. "The Reverse Favourite-longshot Bias and Market Efficiency in Major League Baseball: An Update," Bulletin of Economic Research, Wiley Blackwell, vol. 55(2), pages 113-123, April.
  • Handle: RePEc:bla:buecrs:v:55:y:2003:i:2:p:113-123
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    Cited by:

    1. Forrest, David & Goddard, John & Simmons, Robert, 2005. "Odds-setters as forecasters: The case of English football," International Journal of Forecasting, Elsevier, vol. 21(3), pages 551-564.
    2. Schmidt, Carsten & Strobel, Martin & Volkland, Henning Oskar, 2008. "Accuracy, certainty and surprise : a prediction market on the outcome of the 2002 FIFA World Cup," Papers 08-13, Sonderforschungsbreich 504.
    3. Benjamin Waggoner & Daniel Wines & Brian P. Soebbing & Chad S. Seifried & Jean Michael Martinez, 2014. "“Hot Hand” in the National Basketball Association Point Spread Betting Market: A 34-Year Analysis," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 2(4), pages 1-12, November.

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