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A study of a market anomaly: “White Men Can’t Jump”, but would you bet on it?

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  • Igan, Deniz
  • Pinheiro, Marcelo
  • Smith, John

Abstract

We identify a largely efficient market in which there is a relationship between race and market outcomes. Examining data on NBA games, we find that teams with more black players tend to face larger point spreads and that these teams perform worse against the spread. These biased outcomes are significantly large and persistent so that we are able to identify profit opportunities. We also find evidence that the biased spread is set by the bookmakers rather than being moved as a result of excessive betting on the more black team. We examine several alternate explanations, and the racial composition measures remain significant in these specifications.

Suggested Citation

  • Igan, Deniz & Pinheiro, Marcelo & Smith, John, 2015. "A study of a market anomaly: “White Men Can’t Jump”, but would you bet on it?," Journal of Economic Behavior & Organization, Elsevier, vol. 113(C), pages 13-25.
    • Handle: RePEc:eee:jeborg:v:113:y:2015:i:c:p:13-25
    DOI: 10.1016/j.jebo.2015.02.005
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    Cited by:

    1. Mills, Brian M. & Salaga, Steven, 2018. "A natural experiment for efficient markets: Information quality and influential agents," Journal of Financial Markets, Elsevier, vol. 40(C), pages 23-39.
    2. Arne Feddersen & Brad R. Humphreys & Brian P. Soebbing, 2018. "Sentiment Bias in National Basketball Association Betting," Journal of Sports Economics, , vol. 19(4), pages 455-472, May.

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    More about this item

    Keywords

    Market efficiency; Racial groups; Mistaken beliefs; Market anomalies;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G00 - Financial Economics - - General - - - General

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