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National Sentiment and Economic Behavior: Evidence From Online Betting on European Football

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  • Braun, Sebastian
  • Kvasnicka, Michael

Abstract

National sentiment can have major implications for individual consumption and investment choices but has been researched little by economists. This article studies how national sentiment in the form of a perception or loyalty bias of bettors may affect pricing patterns on national wagering markets for European football. The authors show theoretically that both biases can be profitably exploited by domestic bookmakers through price adjustment. Analyzing empirically a unique data set of betting odds from online bookmakers in Europe, the authors find evidence of systematic biases in the pricing of own national teams, deviations that can be explained by the aforementioned two biases.

Suggested Citation

  • Braun, Sebastian & Kvasnicka, Michael, 2013. "National Sentiment and Economic Behavior: Evidence From Online Betting on European Football," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 14(1), pages 45-64.
  • Handle: RePEc:zbw:espost:123709
    DOI: 10.1177/1527002511414718
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    References listed on IDEAS

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    1. Egon Franck & Erwin Verbeek & Stephan Nüesch, 2011. "Sentimental Preferences and the Organizational Regime of Betting Markets," Southern Economic Journal, John Wiley & Sons, vol. 78(2), pages 502-518, October.
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    Cited by:

    1. Oliver Merz & Raphael Flepp & Egon Franck, 2019. "Does sentiment harm market efficiency? An empirical analysis using a betting exchange setting," Working Papers 381, University of Zurich, Department of Business Administration (IBW).
    2. Brian P. Soebbing & Pamela Wicker & Daniel Weimar & Johannes Orlowski, 2021. "How do Bookmakers Interpret Running Performance of Teams in Previous Games? Evidence From the Football Bundesliga," Journal of Sports Economics, , vol. 22(3), pages 231-250, April.
    3. Deimante Teresiene & Greta Keliuotyte-Staniuleniene & Yiyi Liao & Rasa Kanapickiene & Ruihui Pu & Siyan Hu & Xiao-Guang Yue, 2021. "The Impact of the COVID-19 Pandemic on Consumer and Business Confidence Indicators," JRFM, MDPI, vol. 14(4), pages 1-23, April.
    4. David Winkelmann & Marius Ötting & Christian Deutscher & Tomasz Makarewicz, 2024. "Are Betting Markets Inefficient? Evidence From Simulations and Real Data," Journal of Sports Economics, , vol. 25(1), pages 54-97, January.
    5. Dominic Cortis, 2015. "Expected Values And Variances In Bookmaker Payouts: A Theoretical Approach Towards Setting Limits On Odds," Journal of Prediction Markets, University of Buckingham Press, vol. 9(1), pages 1-14.
    6. Philip W. S. Newall & Dominic Cortis, 2021. "Are Sports Bettors Biased toward Longshots, Favorites, or Both? A Literature Review," Risks, MDPI, vol. 9(1), pages 1-9, January.
    7. repec:cup:judgdm:v:12:y:2017:i:2:p:168-172 is not listed on IDEAS
    8. Stadler Blank, Ashley & Loveland, Katherine E. & Houghton, David M., 2021. "Game changing innovation or bad beat? How sports betting can reduce fan engagement," Journal of Business Research, Elsevier, vol. 134(C), pages 365-374.
    9. 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.
    10. Arne Feddersen & Brad R. Humphreys & Brian P. Soebbing, 2017. "Sentiment Bias And Asset Prices: Evidence From Sports Betting Markets And Social Media," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 1119-1129, April.
    11. Łukasz Gębski, 2021. "The Impact of the Crisis Triggered by the COVID-19 Pandemic and the Actions of Regulators on the Consumer Finance Market in Poland and Other European Union Countries," Risks, MDPI, vol. 9(6), pages 1-15, June.
    12. 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," IJFS, MDPI, vol. 2(4), pages 1-12, November.
    13. Rostislav Staněk, 2017. "Home bias in sport betting: Evidence from Czech betting market," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(2), pages 168-172, March.
    14. Sung, Ming-Chien & McDonald, David C.J. & Johnson, Johnnie E.V. & Tai, Chung-Ching & Cheah, Eng-Tuck, 2019. "Improving prediction market forecasts by detecting and correcting possible over-reaction to price movements," European Journal of Operational Research, Elsevier, vol. 272(1), pages 389-405.
    15. Andy Fodor & Michael DiFilippo & Kevin Krieger & Justin Davis, 2013. "Inefficient pricing from holdover bias in NFL point spread markets," Applied Financial Economics, Taylor & Francis Journals, vol. 23(17), pages 1407-1418, September.
    16. Lahav, Yaron & Santo, Or, 2022. "Wishful betting," Economics Letters, Elsevier, vol. 218(C).
    17. 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.
    18. Raphael Flepp & Stephan Nüesch & Egon Franck, 2016. "Does Bettor Sentiment Affect Bookmaker Pricing?," Journal of Sports Economics, , vol. 17(1), pages 3-11, January.

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