What Causes the Favorite-Longshot Bias? Further Evidence from Tennis
In sports betting markets, bets on favorites tend to have a higher expected value than bets on longshots. This article uses a data set of almost 45,000 professional single tennis matches to show that the favorite-longshot bias is much stronger in matches between lower-ranked players, in later-round matches, and in high-profile tournaments. These results cannot be solely explained by bettors being locally risk-loving or overestimating chances of longshots, but are consistent with bookmakers protecting themselves against both better informed insiders and the general public exploiting new information.
|Date of creation:||30 Jun 2013|
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- Erik Snowberg & Justin Wolfers, 2010.
"Explaining the Favorite-Long Shot Bias: Is it Risk-Love or Misperceptions?,"
Journal of Political Economy,
University of Chicago Press, vol. 118(4), pages 723-746, 08.
- Erik Snowberg & Justin Wolfers, 2010. "Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?," NBER Working Papers 15923, National Bureau of Economic Research, Inc.
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- Snowberg, Erik & Wolfers, Justin, 2010. "Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?," CEPR Discussion Papers 7801, C.E.P.R. Discussion Papers.
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