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Making the seemingly impossible appear possible: Effects of conjunction fallacies in evaluations of bets on football games

  • Nilsson, Håkan
  • Andersson, Patric
Registered author(s):

    This paper investigates whether people obey the conjunction rule when evaluating predictions concerning the outcomes of football games. The conjunction rule states that if event A and event B are two independent events, the probability that both events A and B will occur cannot be greater than the probability that A will occur. Hence, the prediction that AC Milan will beat Fiorentina at the same times as Juventus will beat Lecce cannot be more likely than the prediction that AC Milan will beat Fiorentina. In an empirical study, it was shown that people frequently violated the conjunction rule. When a prediction with a low or intermediate likelihood of success (e.g., Stoke City will beat Manchester United) was combined with one or two predictions that had high likelihood of success (e.g., Liverpool FC will beat Wigan), it was perceived to be more likely to happen than when it was presented alone. This was not true when it was combined with a prediction with a low likelihood of success. Thus, the perceived likelihood of a particular prediction is dependent on the context in which it is presented.

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    File URL: http://www.sciencedirect.com/science/article/B6V8H-4WTRS6V-1/2/a30023dd8e636412041a6c8aab9672a6
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    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 31 (2010)
    Issue (Month): 2 (April)
    Pages: 172-180

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    Handle: RePEc:eee:joepsy:v:31:y:2010:i:2:p:172-180
    Contact details of provider: Web page: http://www.elsevier.com/locate/joep

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    1. Zizzo, Daniel John & Stolarz-Fantino, Stephanie & Wen, Julie & Fantino, Edmund, 2000. "A violation of the monotonicity axiom: experimental evidence on the conjunction fallacy," Journal of Economic Behavior & Organization, Elsevier, vol. 41(3), pages 263-276, March.
    2. Pope, Peter F & Peel, David A, 1989. "Information, Prices and Efficiency in a Fixed-Odds Betting Market," Economica, London School of Economics and Political Science, vol. 56(223), pages 323-41, August.
    3. Bruno Deschamps & Olivier Gergaud, 2007. "Efficiency in Betting Markets: Evidence from English Football," Journal of Prediction Markets, University of Buckingham Press, vol. 1(1), pages 61-73, February.
    4. 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.
    5. David Forrest & Robert Simmons, 2008. "Sentiment in the betting market on Spanish football," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 119-126.
    6. Vaughan Williams, Leighton, 1999. "Information Efficiency in Betting Markets: A Survey," Bulletin of Economic Research, Wiley Blackwell, vol. 51(1), pages 1-30, January.
    7. Andersson, Patric & Edman, Jan & Ekman, Mattias, 2005. "Predicting the World Cup 2002 in soccer: Performance and confidence of experts and non-experts," International Journal of Forecasting, Elsevier, vol. 21(3), pages 565-576.
    8. I. Graham & H. Stott, 2008. "Predicting bookmaker odds and efficiency for UK football," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 99-109.
    9. James Sundali & Rachel Croson, 2006. "Biases in casino betting: The hot hand and the gambler's fallacy," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 1, pages 1-12, July.
    10. repec:cup:cbooks:9780521517140 is not listed on IDEAS
    11. Ayton, Peter, 1997. "How to Be IncoherentandSeductive: Bookmakers' Odds and Support Theory," Organizational Behavior and Human Decision Processes, Elsevier, vol. 72(1), pages 99-115, October.
    12. Ioannis Asimakopoulos & John Goddard, 2004. "Forecasting football results and the efficiency of fixed-odds betting," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(1), pages 51-66.
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