IDEAS home Printed from
   My bibliography  Save this article

An Examination of Prediction Market Efficiency: NBA Contracts on Tradesports


  • Richard Borghesi


In this paper I examine the absolute and relative price efficiency of NBA options listed on Tradesports. com. I find that contracts within specific price bands are misvalued, but also demonstrate that this market is more efficient than is the market for NFL options. Specifically, I show that contracts priced around $25 win (expire at $100) at a rate less than expected, while those priced around $75 win at a rate greater than expected. The magnitudes of these deviations between prices and fundamental values are less than those in the NFL market. Also, while prior theoretical work predicts that low-priced contracts should be overpriced, I instead find that NBA contracts priced near $2.50 win more frequently than expected.

Suggested Citation

  • Richard Borghesi, 2009. "An Examination of Prediction Market Efficiency: NBA Contracts on Tradesports," Journal of Prediction Markets, University of Buckingham Press, vol. 3(2), pages 65-77, August.
  • Handle: RePEc:buc:jpredm:v:3:y:2009:i:2:p:65-77

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Richard Borghesi, 2014. "The impact of the disposition effect on asset prices: insight from the NBA," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 38(4), pages 698-711, October.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:buc:jpredm:v:3:y:2009:i:2:p:65-77. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.