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.
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- Erik Snowberg & Justin Wolfers, 2010.
"Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?,"
CESifo Working Paper Series
3029, CESifo Group Munich.
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